TC Mar-Apr 2021 Issue

TRADE CHRONICLE
IMC posts highest-ever
production, sale volumes
Indus Motor Company (IMC) has made
the highest-ever production and sales
volumes, historically in March 2021.
Following the ease in the COVID-19
lockdown, the economic activities
began to normalize and the automobile
industry has experienced an increase
Indus Motor Awarded 1stPrize by Global
Compact Network Pakistan
Indus Motor Company (IMC) won
the top position at ‘Living the Global
Compact Best Practices Sustainability
Awards 2020’ hosted by the UN Global
Compact Network Pakistan. This is the
sixth year in a row that IMC has won this
award in recognition of its integrating
the 10 Principles of United Nations
Global Compact and for embracing the
UN Sustainable Development Goals
In March 2021, Auto industry sales
surged to a 24mth high, crossing the
20,000 units level to 20,813 units (up
27% mom). This is largely attributed
to the smoothening of supply-chain
disruptions, leading to an uptick in car
deliveries, in our view. While PSMC
added most units to total industry
sales, INDU showed the highest mom
growth in sales.
Among INDU models, Yaris volumes
rose by 29% mom, but sales of the
remaining premium models rose by
an average 86% mom. We believe
that the ramping up of production
during 3QFY21 has led to such a
sharp improvement. Notably, INDU has
achieved the highest level of production
since March 1993. HCAR sold c.3,150
units in March, with combined sales of
Civic and City of 2,603 units, up 19%
mom. BR-V sales witnessed a sharp
2.3x mom rise to 550 units. Sales
have been upbeat despite the delay in
in demand. The consumer purchasing
power was revitalized, and a reduction
in interest rates led to increase in
auto financing and demand that has
required local automotive companies to
vigorously manage their manufacturing
operations to overcome problems
in inbound international logistics
operations.
CEO IMC, Ali Asghar Jamali, stated, “We
are overjoyed and thank the Almighty
for this remarkable achievement. IMC
has remained focused on improving
its operational efficiencies, maintaining
high quality standards, effectively
managing cost pressures and delivering
maximum value to its customers. We
have been operating on double shifts
basis, all Saturdays as well as working
extended hours. These measures have
in its business
operations.
“We’re privileged
to have been
honoured with this top award. It not
only acknowledges IMC’s commitment
towards strategic and sustainable
CSR, but also appreciates its efforts
in reporting globally the practical
implementation of all the SDGs through
its various CSR projects.The Global
Compact Network Pakistan is playing a
critical role in creating awareness and
Pakistan autos industry sales crossed the
20,000 units mark for the first time in two years
anticipated
launch
of a new
City model.
PSMC’s Alto sales rose 12% mom
to 4,745 units (highest monthly sales
since Sep 2019), while the sales of
Wagon R rose by a sharp 55% mom.
Cultus and Bolan sales increased by
an average 10% mom, where only
Ravi sales declined mom. We expect
PSMC sales to continue the present
momentum in the remainder of CY21,
where the impact of new competition is
likely to remain moderate, in our view.
Sales of Hyundai clocked in at 677
units in March (up a soft 4% mom), led
by 12% mom rise in Tucson sales to
613 units. Sales of the H-100 Porter,
however, declined by 39% mom to 64
units. Volumes of the recently launched
sedan Elantra clocked in at 46 units
in its first month of sales (though 248
units were produced). Tractor industry
recorded sales of 5.531 units, up 24%
mom. AGTL sales rose 40% mom to
2,012 units (low base), while that of
MTL rose 17% mom to 3,519 units.
been taken with the view to increase
supply and timely meet our delivery
commitments, while strictly following
the SOPs put in place by the authorities.
I would like to acknowledge the
tremendous and dedicated efforts of my
entire team at IMC, our extended family
of Dealers and vendors and of course
our business partners for making this
possible.”
He further added, “The economic upturn
following the despair soaring over the
auto industry during the COVID-19,
owes itself to the Government’s
introduction of favorable policies.
Reduction in interest rates has been
a major factor that led to an increase
in auto financing, bolstering consumer
confidence.”
helping to develop the social outlook
of businesses in the country which is
commendable”, said CEO Indus Motor,
Ali Asghar Jamali.
We expect tractor sales to resume the
uptrend in the coming months as farmer
income continues to expand. MTL sales
may also benefit from an increase in
exports. March witnessed a rebound
in sales following a seasonal decline
in February. We highlight that industry
sales averaged c.12,000 units prior
to the pandemic, so present growth is
not just attributed to a low-base effect
(Covid-19 lockdown was imposed in
late March 2020).
Low interest rates and new models
from both new entrants and incumbent
OEMs will maintain the robust demand
for cars, in our view. However, the
impact of the present disruption in global
supplies of semiconductor chips may
come into play in the coming months
(presently, it is still uncertain as to what
extent local OEMs will be affected). We
have an Overweight stance on both
the Auto and Tractor OEMs, with Buy
rating on all the scrips under coverage.
We prefer INDU (TP of PKR1,458/sh),
and PSMC (TP of PKR330/sh), as our
top picks.
Courtesy – Intermarket Securities Limited.
TRADE CHRONICLE - Mar - Apr - 2021 - Page # 14