Karachi: Latest statistics released by Pakistan Automobile Manufacturers Association (PAMA) depicted a growth of 19.6%YoY in total auto sales (Cars & LCVs) in 5MFY12.
According to AKD Securities, in this regard, cars sales grew by 19.5%YoY to stand at 62,353 units in the review period, white LCVs sales grew by 20.4%YoY to stand at 8,374 units in 5MFY12. Growth seemed to be a continuation of the post budget rally (removal of SED & reduction of GST). Sequentially however, total auto sales declined by 21%MoM to stand at 11,926 units in Nov’11. On the tractors front, while sales declined by 51.8%YoY to stand at 11,894 units in 5MFY12, sequential growth (11.8%MoM) was witnessed in Nov’11, in-line with the Kharif harvest. Going forward, while the overall domestic auto sector continues to remain exposed to risk of lower-cost imports, PSMC should benefit from the sale of 20k cars (Sep’11-Jun’12) for the Government of Punjab’s taxi scheme. On the tractors front, while news sources indicate GoP’s consideration on the GST issue, AKD Securities advises investors to remain sidelined from tractor scrips, till clarity emerges.
|Auto Numbers – 5MFY12|
Cars & LCVs: In 5MFY12, total Cars and LCVs posted a sales growth of 19.6%YoY (to 70,727 units). In this regard, car sales grew by 19.5%YoY to stand at 62,353 units, while LCVs sales grew by 20.4%YoY to stand at 8,374 units. PSMC (with its smaller, lower priced vehicles) continued to outperform the industry sales growth, reporting a total sales growth of 33%YoY.
The company sustained its market leadership, increasing its market share to 60% in 5MFY12 from 54% in the same period last year (increased weightage of Mehran due to the Punjab Taxi Scheme). PSMC sold 35,973 cars (up 38%YoY) in the review period, with all its variants reporting double digit growth. HCAR & INDU reported respective sales growth of 9%YoY (to 6,790 units) and 3%YoY (to 20,932 units). Sequentially however, Cars and LCVs reported respective sales decline of 23%MoM and 6%MoM in Nov’11.
Tractors: As absence of subsidy schemes and the imposition of GST in the current fiscal year continue to hinder the rural economy, tractor sales reported a decline of 52%YoY (to 11,894 units). In this regard, MIL sold 8,281 units (down 46%Y0Y), while AGTL sold 3,613 units, reporting a decline of 62%YoY. Sequentially however, as the Kharif harvest continues, tractor sales grew by 12%MoM to stand at 3625 units in Nov’11.
Though recent news flow indicates some positive consideration by the Government on the GST issue, AKD Securities advises investors to remain sidelined from tractor scrips till clarity emerges. At current price level, AKD Securities has a Reduce stance on MIL (FY12F PER: 14.05x), which is trading at a premium of 18% to AKD Securities’ target price of PKR320.10/share. AGTL remains under review.