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HCAR: Difficult to keep down

May 26, 2022 (MLN): Despite enduring stiff challenges, Honda Atlas Cars (Pakistan) Limited (PSX: HCAR) has demonstrated solid growth in the profitability on the back of a strong recovery in other income along with a rise in sales revenue amid higher vehicle prices as the company passed on most of the cost to end consumers.

As per the financial statement issued by the company, during the year ended March 2022, the net profits of the company clocked in at Rs2.5 billion (EPS: Rs17.58), up by 40% YoY, compared to the profits of Rs1.8 billion (EPS: Rs12.56) reported last year in March’21.

The top-line of the company grew by 60.4% YoY to Rs108 billion in the midst of a higher sales volume of 56.5% YoY to 38K units recorded in MY22. Civic and City/BR-V sales went up by 59% and 39% YoY during the year respectively. Additionally, the sales revenue also rose on the back of a rise in average vehicle prices within the range of 6%-11% during the year when compared to MY21 average vehicle prices.

On the costs front, escalating freight rates coupled with adverse exchange rate parity, and an increase in prices of CRC and other related commodities resulted in higher production costs, however, the company managed to generate gross profits of Rs5.6 billion. The gross margins dropped slightly from 5.61% to 5.16% due to the above-mentioned reasons.

The selling and administrative expenses increased by 40% YoY to Rs2.2 billion against Rs1.6 billion in wake of enhanced business activity.

Providing support to the bottom line, the other income of the company improved to Rs2 billion against Rs918.5 million. The increase in other income was accredited to higher advances from customers, high delivery time for HCAR vehicles and improved interest rates.

Alongside financial results, the HCAR announced a cash payout of Rs7/share.

To note, SBP lately has tightened consumer lending rules to trim loan growth in the auto sector as per which the maximum tenure of auto finance has been reduced from five years to three years for cars above +1000cc while the maximum tenure of auto finance for cars up to 1000cc has been reduced from seven years to five years. This coupled with the depreciation of rupee and rising freight costs likely to dampen HCAR’s margins going forward. Nevertheless, sales volumes are expected to remain at the elevated level on the back of backlog of orders for all-new Honda Civic.

At the time of writing this, the stock of HCAR is trading at a price of Rs175.9/share, up Rs4.12 or 2.40% from yesterday’s price.

Profit and Loss statement for the year ended March 31, 2022 ('000 Rupees)

 

Mar-22

Mar-21

% Change

Sales

                     108,047,850

                       67,362,307

60.40%

Cost of sales

                  (102,470,241)

                     (63,586,363)

61.15%

Gross profit

                         5,577,609

                         3,775,944

47.71%

Distribution & marketing cost

                       (1,139,359)

                           (736,974)

54.60%

Administrative expenses

                       (1,067,838)

                           (823,588)

29.66%

Other income

                         2,004,952

                             918,484

118.29%

Other operating expenses

                           (984,045)

                           (237,080)

315.07%

Profit from operations

                         4,391,319

                         2,896,786

51.59%

Finance cost

                           (115,914)

                           (116,159)

-0.21%

Profit before taxation

                         4,275,405

                         2,780,627

53.76%

Taxation

                       (1,765,499)

                           (987,422)

78.80%

Profit after taxation

                         2,509,906

                         1,793,205

39.97%

Earnings per share – basic and diluted

                                  17.58

                                  12.56

39.97%

 

Copyright Mettis Link News

Posted on: 2022-05-26T13:30:09+05:00

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