MARKET OVERVIEW:
Ongoing rift between regulators and local brokers related their trading capacity seems foremost reason for market’s bearish trend and lower participation volumes. The benchmark KSE-100 index closed down by 293.98 point to close at 32,566.59 points. Anticipation regarding increasing gas fares for fertilizer kept this sector under selling pressure. Furthermore outflows from foreigners also triggered market decline.
Auto Sales Growth Continues
In our today's morning report we will discuss the latest data released on the automobile industry by the Pakistan Automotive Manufacturing Association (PAMA).Cumulative Sales Up By 17%:
As per data available, overall auto sales (Car, LCV & Pickup) reached 102,491 units in 8MFY15 compared to auto sales of 87,951 units in 8MFY14, depicting surge of 17%. The higher sale was mainly attributed to robust sales volume of Indus after introduction of new model and better farmer income. In February'15 alone the auto sales stood at 17,356 units surge by 36% YoY from 12,789 units sold in Feb'14.
Production Levels Too Moved Up:
Likewise sales, the auto production too remained higher during the period as the cumulative production of Car, LCV & Pickup reached 102,661 units in 8MFY15 growing by 19% against production of 86,322 units during the similar period in FY14. In February'15 alone, the auto production increase by 23% totaled to 14,644 units against 11,893 units produced in February'14.
MoM Sales Dipped By 2%
After 60% MoM rise in auto sales in Jan'15, February remain slow on MoM basis as it
decline by 2% to 17,356 units versus 17,709
decline by 2% to 17,356 units versus 17,709
units in January'15 due to usually consumer buy in first month of new year. While production dip by 9% MoM to 14,644 units versus 16,117 units in January'15.
No Match for Indus:
As far as percentage growth is concerned, Indus remained as the top performer with a sales growth of 52% YoY in 8MFY15 primarily attributed to the launch of its new model. The company sold a total of 34,375 units during the period as against 22,676 units during the 8MFY14. Similarly, PSMC volumetric sales up by 8% to 53,669 units against 49,522 units in 8MFY14. However, Honda sales drop by 5% at 14,041 units in 8MFY15. On MoM basis however Indus sales decline by 21% MoM to 5,077 units in Feb'15 as against 6,415 units in Jan'15.
Outlook
Moving forward we expect that the auto sales to continue growth with same pace of 17% during the remaining period in FY15. While appreciation of PKR would improve profitability but key risk include decline in car prices and new auto policy. We advice caution approach in the sector.
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