JS Securities Limited - JS Research.

Karachi -- January 11, 2023 (PPI-OT)

Autos: Plant closures and weak demand drag down sales by 10% MoM

We preview auto sales volume for Dec-2022 where we foresee sales to drop to 15.8k units, down 10% MoM. The decline comes on the back of lower operating days for INDU during the month, limited raw material availability and subdued demand especially towards the end of the year where customers tend to delay purchases for the New Year.

In a recent development, the SBP has made amendments to the procedure for clearing of LCs for various import items which we expect will worsen the situation of raw material availability for automakers.

We maintain our underweight stance on the sector where we expect the combined impact of subdued demand and supply constraints to keep profits in the sector restricted.

Lower operating days lead to sequential decline in volumes

We preview auto sales volume for Dec-2022 where we foresee sales to drop to 15.8k units, down 10% MoM. The decline comes on the back of lower operating days for INDU during the month, limited raw material availability and subdued demand especially towards the end of the year where customers tend to delay purchases for the New Year. Sales growth during 1HFY23 remained in the negative territory with volumes of 77.4k units, down 41% YoY.

Sales for HCAR remained stable, up 1% MoM aided by demand for its relatively fresh line up whereas PSMC witnessed a decline of 11% MoM owing to lower demand. To recall, plants for both HCAR and PSMC remained...