PSMC Preview: Still a long way to go…

August 14, 2020 (MLN): Pak Suzuki Motor Company is slated to announce its quarterly results for the period ended June 30, 2020, on August 19, where it is expected that the company will once again declare losses, thereby maintaining the streak which has been running for the past six quarters.

A number of factors have been proposed to back this expectation, some of which include the extremely depressing volumetric sale numbers which were observed during and after the imposition of lockdown, as the company had to shut down operations for almost 75 days. The sales also took a hit on the back of the weak economic situation, which pushed not just PSMC but other industry players into despondency as well.

The gross margins are likely to be weaker as compared to the same period of last year due to higher fixed costs and lower sales. On top of that, the finance costs of the company are expected to surge significantly due to the excessive short-term borrowings made by the company to meet the working capital requirements.

After taking into consideration the aforementioned factors, Next Capital expects the company to post a loss per share (LPS) of Rs. 14.17, whereas Al Habib Capital Markets expects the same to be Rs. 13.8, as compared to the LPS of 11.44 incurred in the same period of last year.

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