Pak Suzuki Motor Company Limited: 4Q2015 EPS Rs21.7 (Below expectations) – By Topline Research
Pak Suzuki Motor Company Limited (PSMC) announced 4Q2015 earnings of Rs1.8bn (EPS Rs21.7) against Rs311mn (EPS Rs3.8) in same quarter last year. The result was also accompanied by a final cash dividend of Rs15/share. This result was below market consensus.
PSMC revenue grew by 86% YoY to Rs23.5bn in 4Q2015 as company sold 36,712 units in the fourth quarter (+97% YoY). We attribute this increase in volumes to the taxi scheme launched by Govt. of Punjab in provincial budget of FY15. To recall, PSMC offered a discount to Govt. of Punjab due to large order of Taxis.
Gross profit improved substantially to Rs3.2bn (+271% YoY) in 4Q2015 while gross margins rose by 677bps to 13.6% YoY. We mark this improvement to 22% YoY fall in international steel prices during 4Q2015 and favorable exchange rate movement as US$ and Pak Rupee (PKR) appreciated against Japanese Yen (JPY) by 5.3% YoY and 2.4% YoY, respectively.
Other income grew by 348% YoY to Rs318mn in 4Q2015, as the company earned interest on advances received from customers owing to strong car demand.
Distribution expenses surged to Rs445mn (+184% YoY) led by increased number of units sold.
On QoQ basis, revenue of the company posted an increase of 11% from Rs21.2bn in 3Q2015 due to 8.7% QoQ volumetric growth. However, gross margins declined by 229bps from 15.9% in 3Q2015. We attribute this decline to 1% QoQ appreciation of JPY against US$ and higher sales of taxi units (at discounted price) during the quarter.
In 2015, PSMC earnings stood at Rs5.8bn (EPS Rs70.9) versus Rs1.9bn (EPS 23.4) in the same period last year. Revenues improved substantially, by 58% YoY, while gross margins improved by 579bps to 13.6% from 7.8% during 2014. PSMC sold 133,660 units in 2015 – up by 72% YoY.
By: Topline Securities (Private) Limited