Written as on July 18, 2012
Highlights
• PAT to improve by 54%YoY to Rs4.2bn, EPS of Rs53.77 for FY12
• Volumetric sales up by 7.3%YoY in FY12
• Recommendation ‘Hold’ TP of Rs290/share for Dec-12
In today's value seeker we present the FY12 result preview of Indus Motor Company Limited (INDU) coupled with our recommendations for the scrip as the company is scheduled to announce FY12 result on August 10, 2012.
PAT to improve by 54%YoY to Rs4.2bn , EPS of Rs53.77 for FY12
Indus Motor Company Limited (INDU) is expected to post record earning of Rs4.2bn (EPS of Rs53.77) up by gigantic by 54% in FY12. The massive boost in PAT is mainly due to i) increased vehicles prices by ~10%YoY ii) volumetric growth in sales mounting by 7.3%YoY iii) 24%YoY rise in other income and iv) increase in sales of Hilux as it is a high margin variant all these are the major factors which are expected to boost up the bottomline of the company during FY12. Moreover, we also expect the company to announce Rs12/share final cash dividend while Rs8/share has already been paid during the year, taking the total dividend to Rs20/ share for FY12. On a QoQ basis, the company expected to register a rise of 18%QoQ in PAT to Rs1.3bn (EPS of Rs16.95) for 4QFY12. During the said period, a ~5%QoQ improvement in volumetric sales, 5%QoQ appreciation in vehicles prices coupled with 33%QoQ growth in other income are expected to be main factors behind this phenomenon rise in the bottomline. However, the major risk to bottomline earnings for FY12 stood with 11.8%YoY depreciation in PKR against Yen.
Volumetric sales up by 7.3%YoY in FY12
The unit sales of the company are expected to grow by 7.3%YoY to 55k units in FY12. The major driver of the company sales is, Corolla sales up by 12.4%YoY to 46.2k units, Hilux also supported the sales volume with the increase of massive 52%YoY to 4.4k units, while Coure sales down by 36%YoY to 3.85k units owing to stop of production during the last quarter of FY12.
Recommendation ‘Hold’ TP os Rs290/share for Dec-12
We recommend 'Hold' on INDU with the target Price of Rs290/share as it is trading only 8% up from our target price. At current levels the scrip is trading at PE multiple of 6.3x and dividend yield of 6.9%for FY13.
Abdul Azeem
+92 21 111 111 097 Ext 8633
CA deficit stood USD4.5bn, 1.9% of GDP against the target of 0.6% of GDP
As per the statistics issued by SBP, the Current Account deficit during Jul-Jun FY12 of the country stood at USD4.5bn compared to the surplus of USD214mn witnessed during same period last year. The current account deficit stood at 1.9% of GDP during the year against the Gov't target of 0.6%. This unabated expansion in Current Account was mainly owing to trade deficit of USD15.3bn against the trade deficit of USD10.5bn witnessed during same period last year. During FY12, exports declined by 2.7% to USD24.6bn while imports increased by 11.6% to USD40.03bn. On the flip side, Workers remittances remained one of the major positive factors which posted the increase of 18%YoY increase to USD13.18bn during FY12. High oil prices during 1HFY12, energy crisis resulting substitution amid 5%YoY increase in oil imports during Jul-May 2012 and lack of any inflows under CSF remained major reasons for widening of the current account deficit.
