Earnings Preview: HCAR to suffer the brunt of PKR devaluation and cost overrun

May 20, 2019 (MLN): Honda Atlas Cars Pakistan Limited (HCAR)’s board of directors meeting is currently underway where the company is expected to review and finalize its financial statement for the quarter ended March 2018.

The following brokerage houses have shared their projections of the company’s net gains for this period and the cumulative MY19:

Brokerage House

4QMY19

EPS (% Change over year)

MY19

EPS (% Change over the year)

IGI Securities

Rs.650 million

Rs.4.53 (-53%)

Rs.3.33 billion

Rs.23.3 (-49%)

Ismail Iqbal Securities

Rs.749 million

Rs.5.24 (-45.5%)

Rs.3.43 billion

Rs.24.02 (-47%_

Next Capital

Rs.636 million

Rs.4.46 (-54%)

Rs.3.32 billion

Rs.23.24 (-49%)

JS Global Capital Limited

Rs.408 million

Rs.2.85 (-70%)

Rs.3.1 billion

Rs.21.64 (-52%)

According to the analytical projections given by these research houses, the hefty fall in quarterly profitability is a result of poor performance in sales, weaker margins and noticeable declines in non-core income.

Despite improved prices, there are chances that the company will report decline in sales numbers. Mr. Taimoor Asif at Next Capital pointed out in his preview that , “The flagship brands of Civic & City have declined by 16%YoY collectively during the quarter under review, while BR-V continued its struggle to gain market share whose sales declined by 33%YoY during the quarter.”

Moreover, the input cost are also expected to have expanded in light of PKR devaluation, which the company couldn’t manage to completely pass on to its consumers.

Mr. Ahmed Lakhani at JS Global has explained in his research note that the reason why non-core income is expected to drop is because of “the sharp reduction in cash & cash equivalents.”

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Posted on: 2019-05-20T09:34:00+05:00

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