Karachi, December 28, 2022 (PPI-OT): PAEL – CY21 3QCY22 Analyst
Pak Elektron Ltd (PAEL) organized its analyst briefing yesterday to discuss CY21/3QCY22 results and the company’s future outlook.
Saigol family remains the major shareholder of PAEL with a shareholding of 51.5%. The company has majorly two divisions: Power (49%) and Appliances (51%). The company has strong foothold across the nation, with 1513 dealers, 23 sales offices and 524 service centers.
Market shares of company’s different segments are as follows: refrigerators (24%), deep freezers (15%), microwave ovens (13%), air conditioners (8%), washing machines (4%), water dispensers (27%) and LED TVs (4%). With regards to other players, Haier and Dawlance market shares in the refrigerator segment stands at 32% and 31%, respectively.
With regards to ongoing import restrictions, management commented that they are currently operating under a quota regime and are only able to import 40%-50% of previous year’s volumes. To note, 70-80% of inputs for the home appliances division are imported, vs. 50% for the power division.
The company is well-established throughout the entire power transmission chain (transmission, distribution and household metering). Market share are as follows: Power division (90%), Distributor transformers (25%), Switch gears (73%) and Energy meters (19%). Management expects positive outlook for the said segment going forward, driven by real estate expansion and GoP investment in power transmission/distribution networks.
Roughly, 40% of total power sales are driven by the private sector, and are expected to remain under pressure amid the current macro challenges. Overall, orders for the power division are booked up for the next six months, indicating consistency in the segment’s revenues. The credit period for power sector is roughly 30 to 60 days, whereas the duration for appliances is comparatively longer.
With regards to the company’s strategy to de-merge parts of its operations towards a foreign partner, management commented they’re still exploring the option and have received interest from several multinationals regarding this. Overall, the plan is to separate power and appliance divisions completely, parented by a newly formed holding company.
Company expects working capital cycle to improve in the coming quarters majorly due to sales mix being tilted towards the power division, lowering debt burden by PkR5-6bn, going forward.