Karachi, October 28, 2021 (PPI-OT): PSMC: 3QCY21 EPS clocked in PkR12.07 – Above expectations

Pak Suzuki Motor Company (PSMC) announced its 3QCY21 NPAT of PkR994mn (EPS: PkR12.07) as opposed to a loss of PkR547mn (LPS: PkR6.65) in 3QCY20, overshooting our estimates. This takes 9MCY21 NPAT to PkR2.2bn (EPS: PkR26.62) vs a loss of PkR2.6bn (LPS: PkR31.58) in same period last year.

The revenue increased by 122%YoY and 67%QoQ on account of aggressive volumetric growth (+120%YoY/+75%QoQ) where the budgetary measures sharply stimulated the demand.

Despite currency devaluation of ~6% in 3QCY21, the gross margin stood flat at 5.3% owing to abolishment in Additional Custom Duty (ACD) on CKD parts for 1000cc vehicles and below.

The contribution from other income stood at PkR423mn, translating into PkR3.65/sh after tax, increasing by 199%YoY/71%QoQ owing to increasing cash balance from customer advances.

We expect the automobile sales to remain robust in 4QCY21 owing to healthy order book where delivery times stretch beyond 3 months. We maintain our Buy stance on PSMC with Dec’22 target price of PkR268/sh, implying an upside of 25%.