Morning Briefing for February 07, 2013 – Standard Capital : AsiaNet-Pakistan

Morning Briefing for February 07, 2013 – Standard Capital

March 7, 2014 | Brokerage | Share:

Karachi, March 07, 2013 (PPI-OT): Pak Suzuki Motors posted 89% YoY growth in earnings | Hold – best among peers

Pak Suzuki Motors Company (PSMC) announced financial results for CY13. Despite diminishing net sales company showed fabulous growth in net profit by 89% in this year.

According to Standard Capital Limited, for the CY13 PSMC reported net profit of Rs1.85bn (EPS Rs 22.50) against Rs 978mn (EPS Rs 11.88) reported in last year. For the CY13 company announced 40% (Rs 4/sh) cash dividend against 25% (Rs 2.5/sh) distributed in last year. This indeed is good news since customarily PSMC had never paid dividend beyond exceeding Rs3.

The number game:
For the CY13 company’s net sales were decreased by 12.8% to Rs 51bn as against Rs 58.53bn posted in CY12. Where in due to favourable JPY-PKR parity company’s cost of goods sold was lower for this year and enjoyed a higher gross margin of 6.4% in CY 13 which stood at 4.01% during last year. Cumulative gross profit was up by 38% to Rs 3.2bn in CY13 against Rs 2.3bn in SPLY which is quite favourable for the company. Along with sound gross margin PSMC’s other income was also jump by 75% to Rs 863mn in CY13 which was reported as Rs 494 mn in CY12.

With growing in utility charges and other economic scenario, company’s distribution and other operating expenses was increased by almost 57% in CY13. PSMC also reported higher finance expenses of Rs 57mn in CY13 making it 5x higher interest expense against CY12.

Overall PSMC was able to report 1.85bn as net profit in CY13 against Rs 978mn reported in CY12, which is converted a 89% YoY growth in EPS.

Good starting in CY14:

PSMC stared New Year with improved volumetric sales in Jan 14. As per the latest data available with us, PSMC showed 18% MoM growth in car sales and 20% MoM growth in motorcycles. During Jan’ 14 PSMC was able to sale 7,079 units of cars and 2,114 units of motorcycles which is considered as a good start for PSMC.

An incremental growth in cars demand is expected in coming days because rural economy of country is performing well and when the agricultural sector grows and earn good money they go for luxury items specially cars . So Standard Capital Limited can expect good days for auto sector in term of volumetric sales and gross margin.

PSMC yields CY14 PE of 6.5x based on good earnings ahead due to fabulous start of CY14 in term of volumetric sales, and expected volumetric sales throughout the year. Among peers INDU is yielding 7.4x and HCAR is also yielding FY14 PE of 9x . HOLD

PSMC Statistics
Avg Volume (52 Weeks)       73,963.00
Close                          160.00
52 Weeks High                     174
52 Weeks Low                       96
Market Capitalization           13.22bn
Beta                             0.69
Total No of Shares              82.30mn
Free-Float Shares               21.54mn

 Pak Suzuki Motor P and L Statement
(In Million Rs)          CY13          CY12        Change
Turnover                51,061       58,531.1      -12.8%
Cost of sales           47,817       56,185.4      -14.9%
Gross profit           3,244.5        2,345.7       38.3%
GP Margin(%)               6.4%          4.01%       2.3%
Distribution cost        560.2          357.0       56.9%
Administrative exp.      959.4          860.8       11.5%
Other operating income       863.2      494.0       74.8%
Other operating exp.         175.1      111.2       57.6%
EBIT                   2,413.0        1,510.9       59.7%
Finance costs             57.6           11.1      418.7%
EBT                    2,355.4        1,499.8       57.1%
Taxation                 504.1          521.7       -3.4%
PAT                    1,851.4          978.0       89.3%
EPS                      22.50          11.88       89.3%
DPS                       4.00            2.5       60.0%


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