JS Global Limited – Result Review

Karachi, July 28, 2016 (PPI-OT): PSMC: 1H2016 EPS at Rs17.44, down 41% YoY

Pak Suzuki Motor Company (PSMC) announced its 1H2016 result today, posting a PAT of Rs1,435mn (EPS: Rs17.44), down by 41% YoY. For 2Q2016, the company posted PAT of Rs488mn (EPS: 5.93), down by 67% YoY/49% QoQ.

Sales during 1H2016 declined by 3% YoY due to decline in volumes by 9.3% YoY, due solely to the completion of the cab scheme in Jan/Feb-16, which resulted in Bolan and Ravi sales dipping by 37% and 34%, respectively. Conversely, all other variants posted volumetric growth during the period. Due to changing product mix towards higher priced cars, the overall decline in net revenues was lesser than decline in volumes. Also, gross margins fell by over 250bps during 1H2016 due to appreciating JPY/US$ during the period, coupled with increasing steel prices. The company also booked Super Tax in the quarter, resulting in effective tax rate of 42% for 1H2016.

At current levels PSMC is trading at 2016E P/E of 9.6x. JS Global Limited has a ‘Hold’ rating on the stock with a TP of
Rs418.