The management of Sazgar Engineering Works Limited (SAZEW) held an analyst briefing session on 26th Oct’24 to discuss the company’s performance and future outlook.
Brief Takeaways
- To recall, the company in FY24 posted a PAT of PKR 7,936mn (EPS: PKR 131.29) compared to PKR 995mn (EPS: PKR 16.46) in SPLY, up by 8x YoY. On quarterly basis, in 4QFY24 earnings clocked in at PKR 3,487mn (EPS: PKR 57.69), showcasing a significant jump of 7.4x YoY. Final cash dividend of PKR 12.0/share in 4QFY24 was announced, bringing the total annual payout for FY24 at PKR 20.0/share.
- The company currently has 50+ three-wheeler booking agents and 16+ four-wheeler dealers nationwide. Management stated they are expanding the local dealership network and exploring new export markets.
- The company’s maximum production capacity is 80 units per day, but the current production rate is 43 units per day.
- The Haval H6 represents a significant portion of the total sales of Haval vehicles, constituting 67% of all Haval sales. In contrast, the Haval Jolion accounts for the remaining 33%.
- The company plans to expand its four-wheeler manufacturing facility by installing a 4-megawatt solar system with a CAPEX of PKR 4.5bn. Management believes this investment will address several operational challenges related to storage and paint shops.
- In response to the question about competition from BYD, management indicated that the introduction of BYD will solidify Chinese dominance in Pakistan.
- The company believes that margins will be affected by higher duties once the auto policy expires in FY26, and is therefore planning to develop strategies to address this issue.
- The company exports its three-wheelers to 25 countries, including African nations such as Nigeria, Kenya, and Uganda, as well as Asian countries like Japan, the Philippines, Indonesia, and Cambodia.
- SAZEW currently has 16 active showrooms in the country and plans to grow its network to 25 showrooms by the end of 2025.
- The company is committed to introducing new models of new-energy vehicles and is looking forward to the NEV policy announcement on November 24.
- The company believes that the primary obstacle for EV rickshaws is not infrastructure but rather the price, which is currently set at PKR 1mn.
- Regarding the localization of the Tank 500, the company has stated that it is conducting a market study. Following further evaluation, a decision on the local assembly will be made.
Courtesy – AHL Research
