Morning Call

July 13, 2015

Auto Volumes

Automobile Assembler

Auto Sales in FY15 record an impressive 31% YoY growth!

Auto sales grow by 31% YoY in FY15
Latest numbers from PAMA for Jun-15 show a MoM decline across all segments, which is
typical as sales begin to normalize midway into the calendar year. Looking at FY15 numbers
though is encouraging, as sales of Total Cars and LCVs increased 31% YoY, due to the
1300cc & above and LCVs segments, which posted YoY growths of 35% and 59%,
respectively. This was mainly due to the growth in Corolla sales (new model launch) and the

Marke t Share: YoY Com parison

FY15
13.1%
16.8%

FY14
26.0%
31.6%

54.9%
56.0%

Punjab governments taxi scheme (Bolan and Ravi, 25,000 units each).
Exhibit: Category and Company-Wise Passenger Cars and LCV Unit Sales
Jun-15
May-15
MoM
YoY
>1300cc
1000cc

PSMC

INDU

HCAR

7,476
1,626

<1000cc

Source: PAMA
Auto financing trend

7,672
2,033

-3%
-20%

79%
-18%

FY15

FY14

YoY

78,533
19,133

58,050
16,455

35%
16%

2,306

2,677

-14%

-22%

29,886

29,509

1%

Total Cars
LCV's + 4x4

11,408
6,394

12,382
6,955

-8%
-8%

25%
114%

127,552
52,401

104,014
32,874

23%
59%

Total

17,802

19,337

-8%

47%

179,953

136,888

31%

(PKR bn)
80

Company-wise
PSMC

9,795

11,477

-15%

27%

98,879

77,608

27%

75

INDU

5,458

5,507

-1%

264%

56,943

33,997

67%

70

HCAR

2,488

2,353

6%

-7%

23,622

23,674

0%

65

Source: PAMA, AHL Research

Apr-15

Feb-15

Dec-14

Oct-14

Aug-14

Apr-14

55

Jun-14

60

Source: SBP

Source: PAMA

Jun-15

PSMC: Recorded impressive 27% YoY growth, boosted by Taxi Scheme

PSMC showed robust YoY growth of 27%, spurred by Bolan & Ravi variants, growing by
67% & 84%, respectively, as both were recipients of the taxi scheme. Also, Wagon-R sales
more than tripled in FY15, however that was mainly due to launch in Apr-14. Nevertheless,
with the price cut in Jan-15, sales recorded a healthy uptick, slowing only in Jun-15 (21%
MoM). We see Mehran sales increasing in FY16, due to auto financing factor, with flattish
sales of Cultus and Swift, with the Cultus being eventually replaced by the Celerio in 2016Apr-15

Feb-15

Dec-14

Oct-14

Aug-14

(000
24
21
18
15
12
9
6
3
-

Jun-14

Car and LCV Sales

Sales in FY16 to hold steady, we expect, with marginal upticks across segments
For FY16, we expect sales to hold firm across all major categories, with improvements in
LCVs, 1000cc and below 1000cc segments, due to continuation of the Taxi scheme (LCVs)
and the impact of auto financing in low policy rate scenario (lowest in 4 decades). Moreover,
auto financing as per SBP data, is at its highest in Apr-15 (at PKR 79bn), since May-09, a
high of nearly six years, with a continuously increasing MoM trend since Jul-12 (PKR 45bn).

17 (as per channel checks) to prop up sales in the 1000cc category.

Exhibit: Unit Sales - Pak Suzuki Motor Company
Jun-15
May-15
MoM
Swift
Mehran

270
2,306

289
2,677

YoY

FY15

FY14

YoY

-7%
-14%

-47%
-22%

3,490
29,886

5,128
29,509

-32%
1%

Analyst

Liana

nm

-100%

23

161

-86%

Ahmed Lakhani
ahmed.lakhani@arif habibltd.com

Cultus
Wagon R

1,087
539

1,353
680

-20%
-21%

-7%
-31%

13,837
5,246

14,682
1,621

-6%
224%

+92-21-32461106

Bolan

3,003

3,399

-12%

146%

23,582

14,088

67%

Ravi
Total

2,590
9,795

3,079
11,477

-16%
-15%

138%
27%

22,815
98,879

12,419
77,608

84%
27%

www.arifhabibltd.com

Source: PAMA, AHL Research - nm (Not Meaningful)

Morning Call
July 13, 2015
INDU: FY15 was a turnaround story, with 67% YoY growth
Indus Motors (INDU) recorded an impressive performance in FY15, growing overall unit
sales by 67% YoY, due to 11th Generation Corolla launch, and increasing its market share
in Cars and LCVs from 26% in FY14 to 32% in FY15, mainly at the expense of Honda Cars
(HCAR). Fortuner and Hilux sales, albeit minor in comparison to the Corolla, also
contributed to sales growth, with increases of 85% and 7%, respectively. With INDU
increasing its capacity through a 4th assembly line for Fortuner and Corolla, we expect sales
growth for both variants in FY16 with minor uptick in Corolla sales
Exhibit: Unit Sales - Indus Motor Company
Jun-15
May-15
Corolla

MoM

YoY

FY15

FY14

YoY

4,718

5,030

-6%

386%

51,398

29,087

77%

54

44

23%

1250%

722

390

85%

Hilux

686

433

58%

31%

4,823

4,520

7%

Total

5,458

5,507

-1%

264%

56,943

33,997

67%

Fortuner

Source: PAMA, AHL Research

HCAR: No growth, with product mix skewed towards City in FY15

HCAR recorded a lackluster performance in FY15, with a shift in product mix, as a 21% YoY
drop in Civic sales was compensated by 15% growth in sales of the City variant. With new
models expected in FY16-17 (per channel checks), coupled with INDU performing close to
capacity, we believe HCAR will regain some of the market share lost to its competitor in
FY16.
Exhibit: Unit Sales - Honda Atlas Cars
Jun-15
May-15
Civic

MoM

YoY

FY15

FY14

YoY

686

720

-5%

-38%

7,805

9,933

-21%

City

1,802

1,633

10%

15%

15,817

13,741

15%

Total

2,488

2,353

6%

-7%

23,622

23,674

0%

Source: PAMA, AHL Research

Tractor Sales up 39% YoY in FY15

Tractor sales rose 39% YoY during FY15, mainly due to the government slashing sales tax
from 16% to 10% at the start of the year, along with subsidy schemes aiding volumes.
Looking ahead, with the government providing much needed impetus to the agriculture
sector in the FY16 budget, through tax exemptions/reductions, we expect tractor sales to
increase in FY16. Furthermore, with the Sindh and Punjab government announcing tractor
subsidy schemes of aggregate ~54,000 tractors during FY16, Al Ghazi (AGTL) and Millat
Tractors (MTL), being the major players are set to benefit from said schemes.
Exhibit: Unit Sales Tractors,
Jun-15

May-15

MoM

YoY

FY15

FY14

YoY

Tractors
MTL

2,556

2,729

-6%

161%

28,711

21,040

36%

AGTL

1,375

1,551

-11%

126%

17,078

11,608

47%

Total

4,016

4,428

-9%

131%

46,800

33,584

39%

Source: PAMA, AHL Research

www.arifhabibltd.com

GHNL and HINO showing stellar YoY growth in FY15

Ghandhara Nissan (GHNL)s truck sales grew by 125% YoY, due to new contracts for its
locally assembled UD trucks, while Hinopak (HINO) also increased sales by 43% YoY. On
MoM basis, GHNL witnessed a 64% decline, while HINO sales increased by 5%.

Disclaimer: The information contained herein is compiled from sources AHL believes to be reliable, but we do not accept responsibility for its accuracy or completeness. It is not intended to be an
offer or a solicitation to buy or sell any securities. AHL and its officers or employees may or may not have a position in or with respect to the securities mentioned herein and they do not accept any
liability whatsoever for any direct or consequential loss arising from the use of this publication and its contents. AHL may, from time to time, have a consulting relationship with a company being
reported upon. All opinions and estimates contained herein constitute our judgment as of the date mentioned in the report and are subject to change without notice.

Morning Call
July 13, 2015
Going forward, with increases in FY16 budget for infrastructure development and China- Pak
Economic Corridor (CPEC) impact, we expect both companies to show robust growth in
coming periods.
Exhibit: Unitt Sales - Trucks, Buses & Three-Wheelers
Jun-15
May-15
MoM
Trucks
GHNL

YoY

FY15

FY14

YoY

42

118

-64%

-11%

852

378

125%

HINO

179

171

5%

58%

1,510

1,055

43%

Buses
HINO

38

40

-5%

41%

475

496

-4%

1,206

1,088

11%

27%

13,991

13,107

7%

Three Wheelers
SAZEW

Source: PAMA, AHL Research

Recommendation
We remain inclined towards PSMC, with our revised TP of PKR 481/share, presenting an
upside of 10.3%, thereby meriting a BUY call. For INDU, we recommend a HOLD, with a
TP of PKR 1,275/share and a corresponding upside of 2.4%, as all positives are priced in,
per our estimates.

www.arifhabibltd.com
Disclaimer: The information contained herein is compiled from sources AHL believes to be reliable, but we do not accept responsibility for its accuracy or completeness. It is not intended to be an
offer or a solicitation to buy or sell any securities. AHL and its officers or employees may or may not have a position in or with respect to the securities mentioned herein and they do not accept any
liability whatsoever for any direct or consequential loss arising from the use of this publication and its contents. AHL may, from time to time, have a consulting relationship with a company being
reported upon. All opinions and estimates contained herein constitute our judgment as of the date mentioned in the report and are subject to change without notice.

Morning Call
July 13, 2015
Mark et Re view
KSE - Closing
Points Change
% Change
MTD Change
YTD Change
Turnover (m)
Source: KSE
Volum e Le aders
KEL
PACE
TPL
BYCO
TRG
Major Gaine rs
FEROZ
JLICL
MFFL
POML
SUTM
Major Lose rs
SIEM
SRVI
EXIDE
HINO
CPPL
Source: KSE
Se ttle m e nt Data
PACE
KEL
TPL
JPGL
CSIL
* data of Jul 10, 2015
Future Open Int
PAEL-JUL
ENGRO-JUL
MLCF-JUL
DGKC-JUL
EFOODS-JUL
Total
Source: KSE
Fixe d Incom e
6M KIBOR (%)
T-Bill 12M (%)
PIB 10Yrs (%)
Source:SBP
Curre ncy Rates
USD
EUR
GBP
Source: SBP
Com m odity Price s
Gold ($/oz)
WTI ($/bbl)
Source: Bloomberg

All s hare
24,524.79
(8.63)
-0.04%
488.07
1,126.88
316.02

KSE-100
35,112.29
(34.84)
-0.10%
713.43
2,981.01
145.12

Volum e(m )
21.13
19.90
16.64
13.90
13.71
Change

Close
8.02
7.39
20.67
27.11
37.55
Close

22.65
21.00
12.33
12.21
12.00
Change
-53.22

747.92
441.00
443.00
256.47
254.00
Close
1,177.28

-43.06
-12.92
-8.13
-7.57

854.44
1,105.08
845.78
205.78

Volum e
11.2
11.2
7.1
5.3
4.8

% Se ttle d
49.1%
44.1%
41.2%
43.9%
46.1%

Shares (m ) Value s(m )

25.9
2193.8
4.8
5.7
3.0
2.6
129.0

1467.6
465.5
451.7
400.6
8429.4
10-Jul-15
7.03%
6.97%
10.00%

Todays News

The World Bank and the International Monetary Fund are launching a new initiative to
help developing countries strengthen their tax systems, says an official announcement.
Analysis associated with the two institutions suggests that many lower-income
countries have the potential to increase their tax ratios by at least 2 to 4 per cent of
their GDPs, without compromising fairness or growth. Raising additional revenues will
allow developing countries to fill financing gaps and to promote development.
Pakistan is top on the list of the countries that need to reform their tax systems. In a
recent statement, the IMF mission chief in Pakistan urged the rulers to broaden the
countrys tax base. The countrys tax-to-GDP ratio stood at 9 to 10pc of GDP, which,
the IMF believes, should be increased to 15pc over the medium term to protect
spending on high priority areas, including the social sector. (Dawn)

Infrastructure project financing is gathering pace in Pakistan as its outstanding amount

stood at PKR 312.3 billion at the end of March, which is up 22.6% from a year ago.
According to latest statistics released by the State Bank of Pakistan (SBP), the quarteron-quarter growth of 4.9% in infrastructure financing in January-March was mainly on
the back of power generation, liquefied petroleum gas (LPG) and road, bridge and
flyover (RBF) sectors. (Tribune)

Margin Trading System

July 10, 2015

Day Vol Day Value Wght Avg

Op. Vol

Op. Value % open

(m n)

(PKR m n)

(m n)

(PKR m n)

ENGRO

0.36

93.56

12.2%

UBL

5.73

813.64

18.3%

PAEL

0.82

60.43

14.7%

ENGRO

2.38

608.84

13.7%

UBL

0.22

31.60

12.3%

SSGC

9.25

321.19

7.2%

FFBL

0.50

24.98

13.8%

PAEL

4.21

293.42

6.6%

SSGC

0.58

21.12

14.4%

EFERT

3.71

281.64

6.3%

Total

8.33

384.03

1283.1%

Total

98.30

4,453.40

Source: NCCPL

MSCI Index

Last

Day

YTD

Pakistan

135.2

0.3%

-1.0%

10-Jul-15

-7.19

Frontier Mkt

571.1

0.7%

-6.7%

MTD

-16.6

Emerging Mkt

932.9

1.4%

-2.5%

FYTD

-16.6

EM Asia

453.0

1.4%

-1.0%

CYTD

-91.1

Source: MSCI
Board Meetings
P.T.C.L
Fauji Fertilizer Bin Qasim Ltd

FIPI (USDm )

Net Buy/(Sell)

Source: NCCPL
Period
2Q
2Q

Siemens Pakistan Engineering Co

3Q

Unilever Pakistan Foods Ltd

2Q

Date
Tim e
15-Jul 12:30 PM
29-Jul 11:15 AM
29-Jul
5:00 PM
24-Aug

2:30 PM

Location
Islamabad
Karachi
Dubai
Karachi

Source: KSE
10-Jul-15
101.63
113.55
157.97
10-Jul-15
1,163.70
52.74