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					                                                                                                                                                                                         Morning Call
                                                                                                                                                                                                       April 12, 2012

  Auto Data                                                                                                                                                                  Automobile & Parts
  9MFY12 sales: The growth story continues
                                                                                                                               The Pakistan Automotive Manufacturers Association (PAMA) recently announced
                                                                                                                               auto sales and production figures for Mar-12. As per the latest available data, total
        Marke t Share: YoY Com paris on                                                                                        car and LCV sales witnessed a 15% YoY growth during 9MFY12 and stood at
                                             11%                                                                               128,537 units. Segment-wise break-up reveals that the LCV and 4x4 segments led
                                                                                                                               the growth with combined sales increasing by 27.9% YoY to 30,964 units during the
                                                                                                                               period under review. This was followed by the mid-sized segment (1000-1300cc), of
                                                                                                                               which 22,416 units were sold, depicting a growth of 26.3% YoY. The laggard during
                                    30%                                                                                        this period remained the high-end segment (1300cc+), which grew by a meager
                                                                        63%               55%
                                                      FY11                                                                     0.7% YoY to 46,388 units during 9MFY12. This lackluster performance can mainly
                                                                                                                               be attributed to the suspension of production at Honda Atlas Car’s (HCAR) plant
                                                                                                                               since Nov-11 (HCAR has partially resumed production in Mar-12). The economy
                                                                                                                               segment (less than 1000cc) also contributed to the overall growth and sales
                                                                                                                               improved by 21.1% YoY to 28,769 units.
                       PSMC                              INDU                              HCAR
                                                                                                                                Auto data        Mar-12   Feb-12    MoM    Mar-11      YoY 9MFY12      9MFY11    YoY
 Source: PAMA
                                                                                                                                1300cc & above    5,508    4,898   12.5%    5,452     1.0%    46,388    46,044    0.7%
             PKR JPY Parity
                                                                                                                                1000cc            2,989    2,841    5.2%    3,392    -11.9%   22,416    17,749   26.3%
1.18                                                                                                                            <1000cc           5,972    5,502    8.5%    3,771    58.4%    28,769    23,747   21.1%
1.13                                                                                                                            Total cars       12,034   11,351    6.0%   11,967     0.6%    97,573    87,540   11.5%

1.08                                                                                                                            LCV's + 4x4       4,644    3,611   28.6%    3,771    23.2%    30,964    24,209   27.9%
                                                                                                                                Total            16,678   14,962   11.5%   15,738     6.0% 128,537     111,749   15.0%
                                                                                                                                Com pany w ise   Mar-12   Feb-12    MoM    Mar-11      YoY 9MFY12      9MFY11    YoY
                                                                                                                                PSMC             11,198   10,003    12%      9,626     16%    81,360    61,693    32%






                                                                                                                                INDU              4,492    4,904     -8%     4,268      5%    38,858    37,259     4%
                                                                                                                                HCAR                975       33   2855%     1,670     -42%    7,999    12,114   -34%

 Source: Bloomberg                                                                                                              Source: PAMA
                                                                                                                               PSMC: Sales grow by a third in 9MFY12
         Car and LCV Sales ('000 units)                                                                                        Pakistan Suzuki Motor Company Limited (PSMC) recorded 9MFY12 sales of 81,360
18                                                                                                                             units, translating into a sales growth and capacity utilization of 32% and 72%
                                                                                                                               respectively. Although a jump in demand on account of the Yellow Cab Scheme
                                                                                                                               played a vital role in this improved performance (sales of Bolan and Mehran
14                                                                                                                             increased by 48% and 34% respectively in 9MFY12), the Company’s balanced
12                                                                                                                             product mix has ensured that the rest of its product portfolio does not lag behind in
10                                                                                                                             sales. Special mention of the performance of Swift, Cultus and Alto brands is
                                                                                                                               pertinent here, which registered YoY sales growth of 87%, 27% and 26%
                                                                                                                               respectively in 9MFY12. Total units sold by the company increased by 12% on a
                                                                                                                               MoM basis in Mar-12 to 11,198 units. On a YoY basis, this figure is 16% higher than




                                                                                                                               Mar-11’s sales of 9,626 units.
                                                                                                                               INDU: Hilux’s phenomenal sales offsets lackluster Coure performance
 Source: PAMA                                                                                                                  Mar-12 was the third consecutive month in which Indus Motor Company Limited
                                                                                                                               (INDU) experienced sales contraction. The Company sold 4,492 units during the
 Analyst                                                                                                                       month, which is lower by 8% on a MoM basis. However, 9MFY12 sales are up by
 Umar Hafiz                                                                                                                    4% YoY to 38,858 units. The main reason behind this increase was an 61% YoY
 umar.haf iz@arif                                                                                                 jump in Hilux sales following the introduction of the 4x4 Toyota Hilux-Turbo in Dec-
                                                                                                                               10. The recent introduction of Hilux’s ‘Vigo Champ’, and that too in an (expected)
                                                                                                                               election year, is likely to further boost the revenue generated from the brand. Sale of
                                                                                                 Corolla during 9MFY12 increased by 6% YoY to 32,814 units. On a MoM basis,
                                                                                                                               Corolla sales declined by 9% to 3,774 units. This figure however, is 11% higher than
Disclaimer: The information contained herein is compiled from sources AHL believes to be reliable, but we do not accept responsibility for its accuracy or completeness. It is not intended to be an
offer or a solicitation to buy or sell any securities. AHL and its officers or employees may or may not have a position in or with respect to the securities mentioned herein and they do not accept
any liability whatsoever for any direct or consequential loss arising from the use of this publication and its contents. AHL may, from time to time, have a consulting relationship with a company
being reported upon. All opinions and estimates contained herein constitute our judgment as of the date mentioned in the report and are subject to change without notice.
                                                       Morning Call
                                                                   April 12, 2012
Mar-11’s sales of 3,397 units. INDU’s announcement of Coure discontinuation has
led to a 32% YoY decline in sales of the brand during 9MFY12 to 3,186 units.
HCAR: Plant (partially) back on line
Following months of plant closure [on account of Honda Motor Company’s plant in
Thailand (HCAR’s primary parts supplier) going offline due to record floods in
2QFY12], Honda Atlas Cars Pakistan Limited (HCAR) has resumed production of
its Civic model. During Mar-12 the Company sold a total of 975 units (down by 42%
YoY), of which sales of Civic stood at 966 units. This figure is 69% higher than
FY11’s monthly sales average of 572 units, and indicates substantial improvement
in sales for the remainder of FY13 on account of deferred sales. HCAR is expected
to resume production of City in May-12. The supply disruptions have left the
Company’s 9MFY12 sales reeling at 7,999 units, depicting a sizeable 34% YoY
Tractor: High base effect leads to lower sales
Tractor sales declined by 30% MoM and stood at 6,229 units in Mar-12. However,
this figure is higher by 24% YoY, as compared to Mar-11’s sales of 5,032 units.
The reason behind the MoM decline is a high base effect caused by deferred sales
in Feb-12 owing to reduction in GST to 5% from 16%. Sales during 9MFY12 shrunk
by 44% YoY to 28,169 units on account of the earlier imposition of GST at the rate
of 16%. Al-Ghazi Tractors sold 2,229 units in Mar-12, which is 21% lower on a YoY
basis. Millat increased its tractor sales by 82% YoY to 4,000 units in Mar-12. Going
forward, we expect the segment to perform well for the remainder of FY12 owing to
a backlog of orders.
PSMC is our top pick
With an upside potential of 9% to our Dec-12 target Price of PKR 75.5/share, our
top pick in the sector is PSMC. A CY12 PER of 5.3x further sweetens the offering.
Meanwhile, the scrip of INDU offer a potential upside of 2% to our Jun-12 target
price of PKR 265.5/share and is trading at a FY12 P/E of 6.9x.