Sector Update - Autos

AsiaPac | Pakistan | Equities Automobiles & Parts

Auto sales to remain depress in 2QFY14

Car sales up 7% YoY In 4MFY14 - 1300cc segment outperforms
Pakistan Automotive Manufacture Association (PAMA) has released its sales and production data for Oct-13. According to the data, total industry sales (including Cars+LCVs+Jeeps) went up 7%YoY in 4MFY14, though sales declined 11%MoM. The 1300cc segment solely driven by HCARs new models posted 9%YoY growth along with 9%YoY growth in the Pick-ups segment led by Suzuki Ravi. Surprisingly, under the same segment, production of Hyundai Shehzore was resumed and 47 units sold in Oct-13. Stats continue to show massive growth of 102% for the jeep segment owing to late launch of Fortuner in FY13. PSMC, INDU and HCAR showed 3%, 0.1% and 34%YoY growth respectively attributing ~12%, 0.3% and 22%MoM decline in PSMC, INDU and HCARs sales respectively.

Tuesday, 12,Nov-2013

Market Data
Avg Daily T/O (PKR-mn) Avg Daily T/O (USD-mn) Avg Daily T/O (Share-mn) Mkt Cap (PKR mn) Mkt Cap (USD mn) P/B P/E EV/ EBITDA Free Float (%)
Source: Thomson Reuters

0.37 0.003 21.25 1,944 18.16 1.91 8.34 3.68 25

HCAR driving the sales up

Company wise analysis reveals HCAR as the sole winner by posting 34%YoY growth in 4MFY14. HCARs Civic has shown ever promising results going up 52%YoY while Honda City too supported the luxury segment by posting 22%YoY growth. PSMC managed to register a muted 3%YoY growth owing to 22%YoY increase in the sales of both Ravi and Bolan whereas sales of both Liana and Swift declined 29% and 27% respectively. Mehran sales went down 3% while Cultus sales went up 7%. Stats for INDU continue to disappoint, showing meager 0.1% YoY growth. INDUs Corolla sales went up by meager 2%YoY while Hilux sales declined 15%YoY. INDUs Fortuner was launched in Feb-13 which has driven the Jeep segment up 102%YoY; however from companys perspective Fortuner is a big disappointment uptill now.

Stock Performance (52 weeks)

(%) Absolute KSE100 1M -1% 7% 3M -6% 0% 12M 42% 45%

Disappointing MoM results

MoM analysis reflects the negative effect of year end phenomena on the total industry sales which went down 11%. Sales volume of PSMC, INDU and HCAR went down by 12%, 0.27% and 22% respectively. Our industry is prone to the last quarter of every calendar year as consumers prefer to buy cars with New Years registration.
Segment performance 1300 and above 1000 cc 800 cc & Below 1000cc Total Cars JEEPS (4X4) PICK UPS Company wise PSMC INDU HCAR Others Total Industry sales
Source : PAMA, Alt Research

Relative to Mkt
Source: Thomson Reuters

8%

6%

3%

4MFY'14 4MFY'13 19,217 4,609 13,403 37,229 335 5,234 23,522 11,014 8,024 238 42,798 17,684 4,317 12,989 34,990 4,782 22,753 11,003 6,009 173 39,938

YoY Oct'13 9% 4,378 7% 1,258 3% 3,054 6% 8,690 9% 1,199 3% 5,556 0.1% 2,595 34% 1,720 38% 7% 9,955

YoY MoM 2% 27% -9% 14%

Relative Performance
Autos 120 100 80 60 40 20 11-Nov-12 11-Sep-13 11-Mar-13 11-May-13 11-Nov-13 11-Jan-13 11-Jul-13 KSE100

5% -18% 6% -10% 0% -16% 9% -12% -4% -0.3% 8% -22% 35% 6% -11%

166 102%

66 560% -25%

84 664%

Source: Thomson Reuters

Outlook: Auto sales to remain depress in 2QFY14

Despite of economic woes and in the absence of AIDP-II industry sales managed to register growth on YoY basis. Going forward, We expect industry sales to remain depressed in Nov-Dec-13 owing to year end phenomena, however new model of corolla is expected in the 2HFY14 that will certainly boost INDU sales. Furthermore, HCAR is expected to launch sports hybrid CR-Z soon ahead of INDUS Prius.
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Analyst Syed Ali Ahmed +92 21 3432-6919

s.ali@alt-research.com

504, 5th Floor, Business Avenue, Plot 26-A, Block-6, P.E.C.H.S., Shahra -e-Faisal, Karachi. PHONE : +92 21 3432 6917-19 WEBSITE : www.alt-research.com EMAIL : research@alt-research.com

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