Pakistan Research

Global
Daily Update

November 12, 2014

Capital Market Daily Sector Stance

Sector Update - Automobile POSITIVE
New car sales inched up by 4% YoY
Auto Sector Valuation
Latest monthly autos sales data released by PAMA shows that the combined sales for
Passenger Vehicle (PV) and Light Commercial Vehicle (LCV) segment posted a growth of FY13 FY14 FY15E
4% YoY to 44,550 units during 4mo FY15, against 42,796 units sold same period last year. 52.8 21.1 12.4
P/E (x)
Pickup in auto sales was primarily due to new Corolla model, which received large booking
orders post its launch. However, potential increase in sales was slowed by increase in P/B (x) 6.3 5.0 4.1
advance tax on new vehicles for non-filers in federal budget FY15. However, on a monthly
basis, new car sales reported a healthy growth of 27% YoY (+0% MoM) to 12,651 units D/Y (%) 2 2 3
during Oct’14 because of new Corolla model launched by INDU and City’s facelift introduced
by HCAR. Source: Global Research
1mo ending % 1mo ending % 4mo ending %
Sep14 Oct14  Oct13 Oct14  Oct13 Oct14 
801-1300cc Price Performance
Mehran 2,436 2,323 (5) 1,972 2,323 18 9,154 8,564 (6)
Cultus 917 1,264 38 1,258 1,264 0 4,609 4,245 (8)
Wagon-R 258 321 24 - 321 n.m. - 1,288 n.m. 250%
Santro 11 8 (27) - 8 n.m. - 33 n.m.
Total 3,622 3,916 8 3,230 3,916 21 13,763 14,130 3 200%
1301-1800cc
Liana 5 1 (80) 31 1 (97) 61 14 (77) 150%
Swift 333 273 (18) 361 273 (24) 1,757 1,223 (30)
Honda City 1,077 1,113 3 1,004 1,113 11 4,532 4,111 (9) 100%
Honda Civic 671 622 (7) 716 622 (13) 3,492 2,511 (28)
Corolla 4,358 4,099 (6) 2,266 4,099 81 9,375 12,645 35 50%
Total 6,444 6,108 (5) 4,378 6,108 40 19,217 20,504 7
LCV & Jeep 0%
Bolan/Cargo Van 1,098 1,208 10 1,082 1,208 12 4,249 4,228 (0)

Dec-13

Jun-14
Feb-14
Oct-13

Apr-14

Aug-14

Oct-14
Ravi 1,157 1,051 (9) 852 1,051 23 3,692 3,910 6
-50%
Hilux 277 247 (11) 299 247 (17) 1,489 1,362 (9)
Fortuner 56 79 41 30 79 163 150 280 87
Defender 35 42 20 36 42 17 183 127 (31)
Shehzore - - n.m. 47 - (94) 47 3 (94) Autos KSE100
Master 4 - (100) 1 - (100) 6 6 -
Total 2,627 2,627 - 2,347 2,627 12 9,816 9,916 1 Source: Bloomberg
Source: PAMA
Board Meetings
INDU: During 4mo FY15, the company’s sales volumes improved by 30% YoY to 14,287
Nov 14’14 Ishaq Textile Mills Limited
units, in contract to 11,014 units in 4mo FY14. Launch of eleventh generation Corolla in
Jul’14 and removal of 10% FED on Fortuner were the main reasons for an improvement in Nov 17’14 Honda Atlas Cars (Pakistan)
company sales. During 4mo FY15, Corolla and Fortuner’s sales increased by 35% and 87% Nov 17’14 Engro Powergen Qadirpur Ltd
YoY to 12,645 and 280 units, respectively. Whereas, Hilux’s sales slid down by 9% YoY to
1,362 units during the period, because of absence of fleet orders for single cabin Hilux Nov 17’14 Jauharabad Sugar Mills Ltd
(4x2). However, the company’s marketshare improved to 32% during the period, against Nov 20’14 Atlas Honda Limited
26% last year.
AGMs / EOGM
PSMC: The company’s sales remained lackluster and clocked in at 23,472 units during 4mo
Dec 15’14 Lalpir Power
FY15, in contrast to 23,522 units sold same period last. Decline in the company’s car sales
can be attributed to an increase in advance tax on the purchase of new vehicle for non- Dec 15’14 Pakgen Power
filers. Consequently, Mehran and Cultus sales eroded by 6% and 8% YoY to 8,564 and Source: KSE Notice
4,245 units, respectively. Whereas, the company’s LCV sales remained satisfactory, where
Ravi and Bolan’s sales stood at 3,910 and 4,228 units. Because of a decline in sales, the
company’s marketshare shrunk by 2% to 53% during the period.
HCAR: During 4mo FY15, the company’s sales volume registered a decline of 17% YoY to
6,622 units. Introduction of new Corolla with 1300cc and 1800cc engine capacity dented
both City and Civic sales during the period. As a result, City and Civic sales eroded by 9%
and 28% YoY to 4,111 and 2,511 units, respectively. Moreover, the company’s marketshare Imran Ahmed Patel
shrunk to 15% during the period, against 19% last year. imran.pateel@gslpk.com
Outlook +92.21.3245.7543
Since Aug 01’14, PKR has appreciated against JPY by 8% to 0.88. We believe this
appreciation is going to improve operating margins for auto assemblers, especially PSMC
and INDU. Moreover, recent softening in international steel prices is likely to further lift
profitability for these assemblers. In addition, volumetric growth in industry sales is
anticipated because of Apna Rozgar scheme and the launch of new Corolla model.
Therefore, we have a POSITIVE stance on the sector.

Please see page 2 for important disclosures

 Pakistan Research
Daily Update

Pakistan Research

Daily Update

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