Equity Analysis /

PAKISTAN AUTOS: Premium cars can ride out tough environment

    Tellimer Research
    2 August 2018
    Published byTellimer Research
    This Pakistan auto sector update is the second in a series of joint reports from Exotix Capital and its research partner in Pakistan, Intermarket Securities (IMS), as we bring together our coverage. Since the April budget introduced a ban on car sales to non-filers of income tax (c40% of aggregate sales in our estimates), share prices of auto assemblers have declined by c30% on average, and are now trading at an average PE of c.7.6x – a 24% discount to the trailing five-year average. In this context, we flag Honda Atlas Cars (HCAR PA) as our top pick due to its lower exposure to non-filers (80%+ customers are filers) and the expected launch of the next generation Honda City in 2019/20.