Karachi: Car sales exhibit a healthy increase of 30% YoY in 3MFY12
According to Arif Habib Limited, Pakistan Automotive Manufacturers Association (PAMA) has released auto numbers for the month of September 2011, recording an increase of 24% YoY to 13,970 units compared to 11,231 witnessed in the same period last year. During the period total Car sales recorded a rise of 27% YoY to 11,198 units. Similarly, LCVs and pick up segment followed the same trend registering a rise of 15% YoY. This was mainly due to 25% growth in remittances during the period and low base affect due to flood last year.
MoM growth was led by Cuore in >1000cc cars.
Likewise, auto sales on a MoM basis depicted a growth of 16% mainly supported by higher production. >1000cc cars recorded the highest increase of 49% MoM to 3,342 units. Surprisingly Cuore led the growth in this segment where it volumetric sales recorded a rise of 37% YoY. On a company wise basis PSMC and HCAR posted healthy growth of 29% each whereas INDU came out to be a loser as sales took a dip of 7% during the month to 3,991 units. In Arif Habib’s view PSMC benefited from Yellow can scheme in Sept ’11 compared to previous month apparent from combined sales of Mehran and Bolan (approved cars for the scheme) of 4,214 units, a growth of 49% MoM.
Healthy growth of 30% YoY in car sales recorded in 1QFY12
In 1QFY12, auto statistics depicted a growth of 30% YoY to 43,507 units despite on average 2%-3% increase in car prices, passing on the PKR depreciation impact against fast appreciating Japanese Yen. This was mainly due to healthy increase of 51% YoY seen in the LCV and pick segment. The sales growth was mainly broad based during the period where all major manufacturers posted a growth led by PSMC who recorded a double digit growth of 48% YoY.
|1300cc n above||5,766||5,668||1.7%||4,724||22.1%||16,936||14,949||13.3%|
|LCV’s + 4×4||2,772||2,279||21.6%||2,402||15.4%||9,531||6,324||50.7%|
Tractors off-take recorded a steep decline of 54% in 1QFY12, however MoM sales improved by 134%
Tractor sales in 1QFY12 have dropped sharply by 54% to 2,242 units compared to 4,830 units same period last year due to imposition of input tax.
Market weight stance on the sector
Auto demand is likely to remain robust going forward despite increase in car prices. This is anticipated due to healthy agricultural income and rise in car financing schemes after the recent slash of 150 bps to 125 in the reference rate. Moreover, the recent car price hikes would help the car assembler to sustain their profit margins although PKR has depreciated by 5% YTD. Thus, Arif Habib Limited revises its auto sector stance to market weight from underweight earlier. Arif Habib’s top pick is INDU, which is trading a discount of 24% to its June 2012 target price of PKR 242/share.