Trade Chronicle Mar-Apr 2022

TRADE CHRONICLE
Chery Tiggo becomes 12th
locally assembled SUV in
Pakistan
Ghandhara Nissan Limited (GNL)
has announced opening of bookings
for SUVs Chery Tiggo 4 and 8 Pro
in Karachi, with a price tag of Rs4.6
million and Rs6.6 million.
The company partnered with Chinese
Chery Automobile Co Ltd. for local
assembly and distribution of Tiggo
series sports utility vehicles (SUVs) last
year.
GNL said it had started assembling
of the SUVs and would be delivering
first batch of the vehicles in April and
May. Tiggo 4 is a 1.5L Turbo five-seater
vehicle, while Tiggo 8 is a 1.6 Turbo
seven-seater SUV. Before the Auto
Development Policy (ADP) 2016-21,
Toyota Fortuner and BR-V were the
only locally assembled SUVs. However,
nearly a dozen SUVs were introduced
after the auto industry was enabled by
the government’s policy. Kia Sportage,
Sorento, Stonic, Peugeot 2008, Hyundai
Tucson, Changan Oshan X7, DFSK
Glory, BAIC BJ 40, and Haval SUVs
are being assembled in the country.
However, GNL doesn’t have greenfield
or brownfield status under the policy.
Pak Suzuki Motor posts
of Rs489mn in 4Q2021
Pak Suzuki Motor Company (PSMC)
has posted a profit of Rs489mn (EPS:
Rs5.94) against a profit of Rs1,221mn
(EPS: Rs14.80) in the same period
last year. Gross Margins decreased
by 5.7ppts YoY to 3.6% in 4Q2021 due
to freight costs along with currency
devaluation and an increase in raw
material prices.
This takes 2021 profits to Rs2,679mn
(EPS: Rs32.56) against loss of
Rs1,378mn (LPS: Rs16.75). The
significant recovery in earnings is
mainly attributable to an increase in
unit sales by 108% YoY during 2021
due to the easing of COVID-19 related
lockdown and economic resurgence.
Courtesy - AHCML Research
Peugeot launches operations in
Pakistan with Lucky Motor Corp
The European automaker “Peugeot”
has officially launched operations in
Pakistan with its exclusive partner
Lucky Motor Corporation (LMC). The
company has initially introduced two
variants of Peugeot 2008 SUV - Active
and ALLURE in Pakistan.
Asif Rizvi, Cheif Executive Officer,
Lucky Motors Company said:
“Lucky Motors is set to change the
automotive landscape of Pakistan by
introducing Peugeot, the first locally
Al-Ghazi Tractors reports
4QCY21 NPAT of PKR743mn
Al-Ghazi Tractors (AGTL) has reported
4QCY21 NPAT of PKR743mn (EPS:
PKR12.82), up a sharp c.60% yoy but
down c.10% qoq. This takes CY21 EPS
to PKR51.03, more than doubling yoy
from an EPS
of PKR23.28
in CY20. The
result is slightly
lower than
our expected
4QCY21 EPS of
PKR13.87, where
the deviation
has stemmed largely from lowerthan-expected
gross margins. AGTL
announced a final DPS of PKR51.03,
greater than our expected DPS of
PKR47.
Key Highlights for 4QCY21:
• Net revenues of PKR5.4bn, broadly in
line with our expectations, up a strong
c.95% yoy (down c.5% qoq), largely
attributed to the c.60% yoy rise in
volumes to c.4,400 units. Also, the price
hikes in November further boosted
revenue, in our view.
• Gross margins clocked in at 21.3%,
down c.7.5ppt yoy and c.3.5ppt qoq,
due to (i) sharp rise in commodity
prices, shipping freight and other
Mar - Apr - 2022
made European brand in the
country. We are very excited
to partner with Peugeot
and look forward to being
associated with Stellantis, a company
that strongly believes in futuristic
mobility solutions.
The first step of this ongoing
commitment to the Pakistani customer
will begin with the introduction of
the Peugeot 2008. Rizvi also termed
the government Auto Industrial
Development Policy (AIDP) 2016-21 as
successful, saying that the government
policy has resulted the addition of 12
new entrants as car manufacturers
bringing in about 15 brands and 25
new vehicles in the country.
The consumers’ choice is limited
to cars designed from the Far East.
Sensing this gap and constraint in
customer preferences and choices, the
company signed up with Stellantis, the
4th largest car company in the world,
having 13 international brands.
input costs and (ii) sharp PKR
depreciation, in our view. Gross
margins are likely to be cushioned
from the continuously elevated input
costs in the coming quarters due to the
multiple price hikes, in our view.
• Distribution expenses decreased by a
sharp c.65% yoy despite the sharp rise
in sales. We await annual accounts for
further clarity on this. Admin expenses
rose c.75% yoy to PKR94mn. Other
income clocked in at PKR47mn, from
PKR14mn last year, due to greater cash
balances, in our view.
• Finance costs clocked in at negligible
levels. This is due to the full retirement
of debt amid strong sales growth. The
effective tax rate clocked in at 29%.
Despite the strong growth in sales
CY22td, margins are likely to remain
under pressure in the coming quarters
given the previous PKR slippage and
elevated commodity prices. Although
farmer dynamics remain favourable
for the sector, the potential increase
in GST in the FY23 Budget (assuming
no subsidies are given), remains a key
risk to the sector, in our view. Although
we have a Neutral stance on AGTL
with a December 2022 TP of PKR405/
sh, in light of the strong payout we
may revisit our estimates upon the
availability of detailed accounts.
Courtesy - Intermarket Securities Limited
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