Pakistan Suzuki Motor Company Limited: Record earnings expected for CY15 – By IIS Research
Pakistan Suzuki Motor Company Limited (PSMC) will be announcing its 4QCY15 results tomorrow. The company is expected to post a phenomenal 4QCY15 EPS of PKR 23.18 (PAT: 1.9bn), an increase of 512.6% YoY bringing the full year 2015 EPS to PKR 74.70 (PAT: 6.1bn), rising by more than 219% YoY. The impressive growth in earnings is expected on the back of significantly high volumes, supported by the Apna Rozgar Schemes along with growth in sales of economy car segments. Furthermore, the plunge in steel prices and depreciating JPY against PKR is expected to provide a further boost to the already inflated gross margins of the company. PSMC is expected to pay a hefty dividend of PKR 15/share along with the results.
PSMC volumetric sales almost doubled in 4QCY15: We expect PSMC topline to grow by 80% YoY in 4QCY15 to PKR 22.8bn, following the considerable uptrend in volumetric sales of the company. PSMC posted total sales for 4QCY15 at 36.7k units, rising by 96.7% YoY and around 10% QoQ. Moreover, the company’s total sales for CY15 have registered at 133k units, increasing by more than 32k units from the previous year. Hence, the total sales of the company is expected at around PKR 84bn. Going forward, the Punjab government schemes has winded down and hence the sales of Bolan and Ravi are expected to normalize from 2QCY16 onwards.
Gross Margins to remain inflated for CY15: PSMC’s gross margins for 9MCY15 have averaged around 13.8%, an increase of more than 5ppts on a YoY basis. The steel prices have remained down throughout CY15 and the depreciating JPY against PKR has also contributed towards the rising margin levels of the local automakers. PSMC’s gross margin for full year 2015 is expected at around 14.4%, more than doubling from the previous year. In the coming quarters, the price of steel is forecasted to rise at a slow pace suggesting PSMC’s margins are expected to remain intact in the coming quarters.
By: Ismail Iqbal Securities (Pvt.) Limited