Morning Call about Auto Data Automobile and Parts – Arif Habib Limited

Karachi, July 13, 2012 (PPI-OT): FY12 auto sales register 22% YoY growth

The Pakistan Automotive Manufacturers Association (PAMA) recently released the monthly auto sales and production figures for the month of Jun-12, the last month of FY12.

According to Arif Habib Limited, as per the data, car and LCV sales witnessed a 22.3% YoY growth in FY12 to 179,101 units, mainly on account of higher farm incomes, Government of Punjab’s Yellow Cab Scheme and deferred sales owing to imposition of Federal Excise Duty in FY11 (and a resultant low base effect). Jun-12 sales were recorded at 19,156 units, which is 29.4% higher MoM. Segment-wise break-up reveals that LCVs and 4x4s led the growth in FY12 with sales increasing by 39.5% YoY, as Hilux (INDU), Bolan (PSMC) and Ravi (PSMC) witnessed upticks of 52% YoY, 69% YoY and 17%% YoY respectively. This was followed by the economy segment (<1000cc), which grew by 29.4% YoY in FY12. On a MoM basis however, the segment’s sales contracted by 7.9%. Sales of automobiles belonging to the midsized segment (1,000-1,300cc) grew by 28.7% YoY in FY12, while Jun-12 sales stood at 3,247 units, which are higher by 25.3% MoM. The high-end segment (1300cc+) exhibited a 7.5% YoY growth during the year to 65,816 units. The segment’s Jun-12 sales however were higher by 19.6% MoM.

PSMC in the lead
Pakistan Suzuki Motor Company Limited (PSMC) witnessed a 40% YoY improvement in sales in FY12 to 112,157 units. As a result, PSMC’s market share also improved to 62.6% during the period. PSMC has benefitted from the Punjab Government’s Yellow Cab Scheme, which has resulted in sales of Mehran and Bolan to increase by 46% YoY and 69% YoY respectively. Sales of Swift, Cultus and Alto meanwhile, increased by 73% YoY, 20% YoY and 37% YoY respectively in FY12. Total units sold by the company in Jun-12, increased by 7% MoM to 11,352 units. On a YoY basis, this figure is 311% higher than Jun-11’s sales of 2,761 units.

INDU: Coure discontinuation drags sales growth to single digits
Indus Motor Company Limited (INDU) managed to increase its volumetric sales by 9% YoY to 54,477 units. Playing a pivotal role in this improvement was a 52% YoY increase in Hilux sales to 4,413 units in FY12, which helped the company overcome lost Coure sales due to the models discontinuation. Sales of the company’s Corolla brand, meanwhile increased by 12.4% YoY in FY12. INDU’s MoM sales in Jun-12 augmented by 15% to 5,570 units.

HCAR: Supply disruption dents a growth story
Honda Atlas Cars Pakistan Limited (HCAR) reported a 22.2% YoY decline in total units sold to 12,119 units in FY12. The company achieved a 93% MoM increase in sales volumes in Jun-12 as production of both its models (Civic and City) reached normal levels following resumption of the company’s supply lines in 3QFY12.

Tractors: Industry sales grow 21% MoM in Jun-12
The tractor industry demonstrated a sizeable 21% MoM growth in Jun-12 to 8,368 units. Although FY12 sales are down by 28% YoY due to imposition (and consequent reduction) of General Sales Tax (GST), the strong monthly sales are an indication of the growth trajectory on which the industry is set in FY13, especially with ease of procurement of farm loans and other incentives to farmers as political tools in an election year. Sales of Al-Ghazi Tractors Limited (AGTL) declined by 35% YoY in FY12, while those of Millat Tractors Limited (MTL) decreased by 24% YoY in the same period. On a MoM basis however, AGTL and MTL managed to improve their volumetric sales performance by 11% and 28% respectively.

Arif Habib Limited currently has a ‘Hold’ stance on PSMC
Based on Arif Habib Limited’s Dec-12 DCF based target price of PKR 110 per share, the stock of PSMC depicts the highest upside potential (amongst companies in Arif Habib Limited’s universe) of 7.6%. The scrip is trading at a CY12E PER and dividend yield of 4.8x 3.9% respectively.