The latest result released by Hinopak Motors Limited shows a huge recovery in the 3QFY12. After experiencing a very slow first half, the company managed to achieve sales of Rs2.6 billion in 3QFY12. This is roughly Rs100 million more than the Rs2.5 billion achieved in 1HFY12. Compared to the same period last year, in 3QFY12 revenue grew by 7 percent, and the PAT improved by 103 percent. The slowdown in sales during the first half of the year was mainly due to supply disruptions from Japan; owed to Tsunami. In addition 16 percent GST was imposed on trucks and buses in the FY11 budget, which resulted in a sizeable increase in price and retardation in demand. The sales in 9MFY12 stood at 1,025 units out of which 405 were sold in 3QFY12, representing a decline of 37 percent compared to 1,619 units sold in 9MFY11 (out of which 489 units were sold in 3QFY11). A company official while talking to BR Research said that the emergence of Chinese trucks and buses in Pakistan is also affecting Hinos demand, as the Chinese trucks are very price competitive. The official further added that the bounce back in the 3QFY12 is mainly due to large institutional orders. After incurring losses in the previous year; in the current year the company raised prices of its vehicles. The impact of the price increase can be seen in the gross margins, which improved this year compared to the previous year. However despite good performance in 3QFY12, the company was not able to offset the losses incurred over the 1HFY12, as the overall nine month losses stood at Rs137 million. The impact of better gross margins was reflected in the operating margins. In addition, a slight cushioning was provided by the decrease in distribution expenses and an increase in other operating income. The major components of the other operating income are income from scrap and commission. Sizeable exchange losses were incurred in the 3QFY12; these losses are reflected in the finance cost which surged by roughly 60 percent in the 3QFY12 over the same period last year. At present the whole auto and allied sector of Pakistan is suffering from the constant rupee depreciation, inflation and power shortages. A bounce back in such a terrible economic environment is really something to cheer. Going forward, the short-term prospects for this company are bright as it has large outstanding orders and in the long term Hinopak Motors Limited is expected to mirror the performance of the economy.
========================================================== Hinopak Motors Limited ========================================================== (Rs mn) Oct-Dec 2011 Oct-Dec 2010 chg ========================================================== Units sold 405 489 -17% Revenue 2,687 2,504 7% Cost of sales 2,337 2,235 5% Gross profit 349 269 30% Gross profit margin 0 0 21% Other operating income 25 10 150% Operating profit 251 146 72% Operating margin 9% 6% 60% Finance cost 97 61 59% PAT 120 59 103% EPS (Rs) 9.68 4.81 101% ==========================================================
Source: KSE notice
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