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Runner Automobiles Ltd: 3Q 21 – c13% revenue growth amid volume recovery; reiterate Hold

  • Consolidated 3Q FY 21 revenue stood at BDT2,771mn, up by c13% yoy
  • Overall gross margin expanded by 180bps yoy
  • Increased tax expenses dwarfed some margin improvement

Consolidated 3Q FY 21 revenue stood at BDT2,771mn, up by c13% yoy. Standalone 3Q FY21 top-line was at BDT964mn, up by c19% yoy which can be attributed to the volumetric recovery in both 2-wheeler (2W) and 3-wheeler (3W) businesses.

RUNNERAU’s 3W sales recovered on the back of the commencement of the old 3W replacement from September 2020.

Q3 21 Truck sales stood at BDT1,808mn, up by 10% yoy. People opted for cheaper options like light and medium-duty vehicles. RUNNERAU cashed on consumers’ limited spending spree. Commercial vehicle sales are expected to continue recovery amid buoyant economic activities and continuation of govt. infrastructure projects.

Overall gross margin expanded by 180bps yoy, attributed to truck GPM expansion of 340bps amid retail price increase. OPEX/sales improved by 200bps on the back of similar level of OPEX ratio improvement in all businesses. The company reaped some scale benefit riding on cost minimisation effort at the 2W, 3W & truck distribution level and volumetric recovery.

Increased tax expenses dwarfed some margin improvement. Consolidated PBT stood at BDT272mn in Q3 21 against BDT167mn (+62% yoy). However, the company reported 3Q 21 NPAT of BDT96mn (EPS: BDT0.85), implying c55% yoy growth, attributed to increased tax expenses. Effective tax rate was c45% in Q3 21 vs c41% in Q3 20, denoting tax % sales 4.4% vs 2.8%.

We reiterate Hold with TP at BDT50 for December 2021, ETR +3.9%, implying 2022f PE of 11.9x and EV/EBITDA of 8.4x. BDT1 upward TP revision came from the change in the forecast horizon.


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