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AKD Quotidian about — Auto Sector: Sales rise by 52%Mom in Jan’13

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by February 12, 2013 Brokerage

Karachi, February 12, 2013 (PPI-OT): According to recent numbers released by PAMA, Jan’13 industry sales for cars and LCVs declined by 14%YoY but rose by 52%MoM to 12,811 units with the sequential increase on account of New Year registrations and likely decline in imported vehicles resulting from the reduction in age limit of imports implemented from Dec 15’12.

According to AKD Securities, in 7MFY13, industry sales numbers show a decline of 27%YoY to record at 70,349 units. Breakup of industry sales in Jan’13 includes car sales of 11,571 units, a 57%MoM increase and sales of LCVs and pickups of 1,240 units, up 16%MoM. However, tractor sales are down by 78%MoM to 1,612 units in Jan’13 due to the increase in sales tax from 5% to 10% since the start of Jan’13. Within individual OEMs, PSMC’s sales grew by 17%MoM in Jan’13 to 7,004 units, mainly driven by 38%MoM and 50%MoM increase in sales volumes of Swift and Cultus, respectively. Sales for INDU and HCAR have rebounded by 2.2x MoM and 2.6x MoM to 3,560 units and 2,220 units, respectively. In view of several positives for local Auto manufacturers (tighter import regime, revival in auto finance, weaker JPY), AKD Securities maintains a Buy stance on PSMC which offers 21% upside to AKD Securities’target price of PKR115/share.

ENGRO is scheduled to announce its full year CY12 results on Feb 15’13. AKD Securities expects the company to post NPAT of PKR1, 109mn in CY12 (EPS: PkR2.17), down by 86%YoY. However, AKD Securities expects a swift recovery in 4QCY12 profits and forecast ENGRO’s NPAT at PKR1, 552mn (EPS: PKR3.04) compared with NLAT of PKR103mn in 3QCY12. Key factors leading to improvement in sequential earnings include robust profitability growth of EFOODS (up 63%QoQ) and `Fertilizer’ subsidiary breaking even in 4QCY12 (NPAT of PKR43m compared with NLAT of PkR1,246mn in 3QCY12). AKD Securities expects operating profitability of Eximp to improve in 4QCY12 and the loss to narrow to PkR31mn on better performance of the phosphates business (phosphate sales up 4.3xQoQ). Power and Vopak are expected to record slight improvement in sequential profitability primarily due to the weakening of PKR(down 1.8%QoQ against US$ in 4QCY12). AKD Securities recommends ‘Buy’ on ENGRO with a Target Price of PKR207/share.


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