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Sector Update - Autos

Car sales up 5% YoY In 6MFY14: Pakistan Automotive Manufacture Association (PAMA) has released its sales and production data for Dec-13. Stats show 5%YoY rise in car sales (-15%MoM). According to the data, total industry sales (including Cars+LCVs+Jeeps) went up 6.5%YoY to 61,252 units in 6MFY14, though sales declined 7.5%MoM. The 1300cc segment posted 6%YoY growth along with 20%YoY growth in the Pick-ups segment. Stats continue to show massive growth of 123% for the jeep segment owing to late launch of Fortuner in FY13. PSMC, INDU and HCAR showed 3%, 3% and 20%YoY growth respectively attributing ~0.1%, 9% and 50%MoM decline respectively.

Import influx hurting local assemblers: PSMC enjoyed 100% market share in 800cc and 1000cc segment. However it had just 10% market share under the 1300cc segment with a total market share of 58% in 6MFY14. Cumulatively, numbers show 3%YoY growth to 35,492 units (-0.1%MoM). With Fortuner, INDUs market share stood at 48% in Jeep segment while Hilux gave 26% market share in Pick-ups segment. Stats indicate a meager 3%YoY growth in total volumetric sales (-9%MoM) with a cumulative market share of 25% to 15,179 units. Meanwhile, HACRS market share in 1300cc segment stood at 39% (6MFY13 35%) with total market share of 16% in 6MFY14 to 9,989 units.

Industry sales down 7.5%MoM: The year end phenomenon has taken its toll on total industry sales which has fallen -7.5%MoM to 8,868 units in Dec-13. As the industry awaits AIDP-II, we hear rumors about GOP increasing the imported used car age policy to 5 years from 3 years. This can be devastating for the local industry which is already struggling to cope with consumer demand. After an intensive survey we have noted the sudden change in consumers choice who according to several dealers are preferring imported Japanese cars over locally assembled cars. HCAR was driving the industry sales up since few months owing to its new models. However, recent stats for HCAR indicate a massive 50%MoM fall to just 655 units (Nov-13 1,310 units). While we fancy the future of Hybrid technology in Pakistan, outlook for local industry remains gloomy as Toyotas Corolla has also aged out and is depicting continuous decline in sales. The new model of Corolla is expected in Jun-14 after which we expect local sales to pick up.

Automobile Sales 6MFY14

AsiaPac | Pakistan | Equities Automobiles & Parts

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Analyst Syed Ali Ahmed +92 21 3432-6919 s.ali@alt-research.com

Friday, 10,Jan-2014

This report has been prepared by Alternate Research and is provided for information purposes only. Under no circumstances it is to be used or considered as an offer to sell, or a solicitation of any offer to buy. This information has been compiled from sources we believe to be reliable, but we do not hold ourselves responsible for its completeness or accuracy. All opinions and estimates expressed in this report constitute our present judgment only and are subject to change without notice. This report is intended for persons having professional experience in matters relating to investments.

Auto Sector: Industry sales up 6.5%YoY in 6MFY14

Source : PAMA, Alt Research

Sector Market Data

Avg Daily T/O (PKR-mn) 0.34

Avg Daily T/O (USD-mn) 0.003

Avg Daily T/O (Share-mn) 22.72

Mkt Cap (PKR mn) 49,084

Mkt Cap (USD mn) 465

P/B 2.32

P/E 9.25

EV/ EBITDA 4.38

Free Float (%) 25

Stocks Performance (52 weeks)

(%) 1M 3M 12M

Absolute 10% 19% 65%

KSE100 6% 22% 58%

Relative to Mkt -3% 4% -7%

Source: Bloomberg

Source: Bloomberg

Segment performance 6MFY14 6MFY13 YoY Dec13 YoY MoM

1300 and above 25,365 23,955 6% 2,544 -3% -29%

1000 cc 7,255 6,193 17% 1,384 64% 10%

800 cc & Below 1000cc 20,259 20,439 -1% 3,285 -16% -8%

Total Cars 52,879 50,587 5% 7,213 -2% -15%

JEEPS (4X4) 472 212 123% 106 361% 242%

PICK UPS 8,097 6,741 20% 1,743 67% 56%

Company wise (Cars + LCVs & 4x4)

PSMC 35,492 34,324 3% 5,981 -0.1% -0.1%

INDU 15,179 14,699 3% 1,982 26% -9%

HCAR 9,989 8,293 20% 655 -24% -50%

Others 592 224 164% 250 862% 136%

Total Industry sales 61,252 57,540 6.5% 8,868 5% -7.5%

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