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IGI Securities Limited – Flash Note (November 16, 2022)

Karachi, November 16, 2022 (PPI-OT): Automobile Assemblers – Honda Atlas Cars (Pakistan) Limited

Earnings: Honda Atlas Cars (Pakistan) Limited (HCAR) announced its financial result for the second quarter FY23, whereby company reported loss of PKR 0.4bn or PKR 2.7/share compared to last year profit of PKR 0.9bn or PKR 6.6/share. This takes total earnings for the half year ended FY23 to 0.3bn (PKR 1.9/share) compared to last year’s 1.9bn (PKR 13.1/share).

Operating performance: For the 2QFY23, Company’s sales recorded a 24%y/y decline to PKR 19.5bn due to production halts and declining demand. On sequential basis, sales are down by 35%q/q. Company’s gross margins declined to 3.4% during the quarter compared to last year same quarter 2QFY22: 7%, on sequential basis also decreased 1QFY23: 6.3%. Selling marketing costs increased marginally 2%y/y to PKR 0.22bn. Interest costs during the quarter clocked in at PKR41mn, increased by 47% when compared from same period last year (PKR28mn) and 2x higher from last quarter (19mn). Effective taxation reported at 342% (PKR 0.54bn) as compared to the same period last year’s 35% (PKR 0.51bn).