Pak Suzuki Motors (PSMC) FY09 Review

Posted the NPAT of PKR 255 Million


The Pak Suzuki Motors (PSMC) has recently announced its result for the period of FY09. The company posted the NPAT of PKR 255 Million comparing to PKR 625 Million during the same period last year which translated a tremendous decline during the reviewing period. The EPS of the bank nose-dived to PKR 3.10 comparing to PKR 7.59 last year.

Net sales dwindled by 34%YoY

The Net Sales of the company dwindled by 34%YoY to PKR 26.23 Billion from PKR 39.67 Billion last year mainly in response to the lower volumetric sales to 51,521 units during the period. Moreover, the cost pressures remained the key concern for the company during the period primarily due to depreciating PKR-USD and PKR-JPY Parity coupled with the increase in steel prices during FY09. However, the increase in car prices supported the margins to show 70bps increment in gross profit margins (GPM) to 2.2% during the period.

Lower bank deposits shrank other income

The other income of the company shrank by 54%YoY to PKR 620 Million comparing to PKR 1.35 Billion last year mainly at the back of deposit income which squeezed by 39%YoY to PKR 408 Million against PKR 671 Million last year.

Finance cost squeezed by 75%YoY

The finance cost of the company witnessed a massive reduction by 75%YoY to PKR 13 Million comparing to PKR 53 Million during the same period last year. The decline was mainly attributed to reduction in interest rate during the period.

Looking Forward

I believe that the PKR-JPY parity is turning back to its historical trend while steel prices also look stable going forward. Moreover, the volumetric sales has already picked up and showed a decent growth in 2HCY09 while the company has increased its sales prices by an average 2% (PKR 10,000 to PKR 15,000) during 3MFY10 which is over and above the estimated surge of 3.5% in company's cost of production during the same period. I maintain ‘buy’ stance for the company by considering its FY10E earnings at 10.25x where my target price for 1HCY10 is PKR 107 per share.