Pak Suzuki Motors Company Ltd. (PSMC) is scheduled to release its 2QCY21 financial result on 31st Aug’21. We expect the company to post a profit after tax (PAT) of PKR 1,899mn (EPS: PKR 23.07) in 1HCY21, compared to loss of PKR 2,462mn (LPS: PKR 29.92) in 1HCY20. Topline of the company is expected to increase by 141% YoY to PKR 66.2bn during 1HCY21 due to lower financing rates and revival of economic activity which aided volumetric growth of 137% YoY (50,096 vs. 21,116 units in 1HCY20).
On a quarterly basis, revenue of the company is expected to increase by 209% YoY amid low base effect and volumetric jump of 193% YoY to 22,019 units. Gross margins are expected to settle at 8.11% (2QCY20: -6.29%) due to appreciation of PKR against USD and economies of large scale.
Finance costs of the company are expected to dip by 74% YoY to PKR 235mn on account of a decline in short term borrowings along with lower financing rates. Furthermore, we expect other income to increase by 377% YoY to PKR 671mn due to surge in cash and bank balances.
Recommendation:
Currently, we have a ‘BUY’ call on the stock with a Dec’21 target price of PKR 416.5/share.
Courtesy – AHL Research