IGI Securities Limited – Day Break

Karachi, May 14, 2019 (PPI-OT): Automobile Assemblers – Apr-19: Industry sales drag on subdued demand; passenger car sales fall by 21%YoY to 17.1k units

The latest sales data released by Pakistan Automotive Manufacturers Association (PAMA), reports industry sales volume declined by 7%YoY to 180k units as all segments witnessed drop in their sales.

We attribute the decline in volumes to unfavorable economic conditions (rise in interest rates) and increase in car prices (PKR depreciation pass-over and increase in FED).

With respect to company wise, a substantial drop of 38%YoY (2.8k units) was reported by HCAR, followed by PSMC, witnessing a decline of 27%YoY to 10.8k units. Similarly, INDU’s sales volumes decreased by 7%YoY to 5.7k units.

We have a “BUY” call on INDU, based on our revised Dec-19 target price of PKR 1,662/share, offering +38% upside from its last closing. The company is currently trading at FY19E P/E of 6.01x and offers a dividend yield of 11.6%.

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