AUTO INDUSTRY'S PERFORMANCE ON STOCK EXCHANGE

SECTOR'S VULNERABILITY TO MARKET FLUCTUATIONS

SHAMSUL GHANI (shams_ghani@hotmail.com)
May 19 - 25, 2008

With the KSE 100 index at almost the same level, a 17% decrease in the auto sector's total market capitalization during the last five months exposes the inherent weakness of the sector in the face of bearish spells triggered by change in the market fundamentals. Pakistan's auto industry seems to have taken a hit more by the weakening Rupee and high oil prices than the impending political uncertainties. The tables 1(a) and 1(b) posted below give a view of the sector's performance on stock exchange during the last five months.

CHANGE IN MARKET CAPITALIZATION DURING LAST 5 MONTHS. 
TABLE 1(A)

POSITION AS OF

COMPANY

PAID UP CAPITAL
MILLION RS.

SHARE PRICE (RS)

6-MAY-08
MARKET CAPITALIZATION
MILLION RS.

SHARE
PRICE (RS)

14-DEC-07
MARKET CAPITALIZATION
MILLION RS.

AUTOMOBILE ASSEMBLERS

Al-Ghazi Tractors

214.682

270.11

11,597.551

292.00

12,537.429

Atlas Honda

472.984

206.65

9,774.214

204.00

9,648.874

Dewan Farooque Motors

770.733

8.49

654.352

13.00

1,001.953

Ghandhara Industries

213.044

27.00

575.219

42.00

894.785

Ghandhara Nissan

450.025

32.00

1,440.080

49.00

2,205.123

Ghani Auto Industries

200.000

14.59

291.800

11.00

220.000

Hinopak Motors

124.060

546.00

6,773.676

599.00

7,431.194

Honda Atlas Cars

1,428.000

45.95

6,561.660

58.00

8,282.400

Indus Motor

786.000

325.26

25,565.436

344.00

27,038.400

Millat Tractors

187.420

287.50

5,388.325

287.00

5,378.954

Pak Suzuki Motor Co

822.999

209.90

17,274.749

354.00

29,134.165

Saif Nadeem Kawasaki

25.830

2.01

5.192

3.00

7.749

AUTOMOBILE PARTS & ACCESSORIES

Agriauto Industries

120.000

85.00

2,040.000

117.00

2,808.000

Atlas Engineering

123.367

32.00

394.774

31.00

382.438

Atlas Battery

69.925

194.80

1,362.139

155.00

1,083.838

Baluchistan Wheels

133.443

82.00

1,094.233

92.00

1,227.676

Exide Pakistan

54.057

214.00

1,156.820

207.00

1,118.980

General Tyre & Rubber

597.713

23.65

1,413.591

28.00

1,673.596

Transmission Engineering

45.000

11.00

49.500

10.00

45.000

Automotive Batteries

52.648

28.45

149.784

32.00

168.474

Bela Automotive

58.000

6.00

34.800

5.00

29.000

Dewan Automotive Engg.

214.000

3.70

79.180

6.00

128.400

Bela Engineering

34.000

0.30

1.020

0.30

1.020

Toga Pakistan

26.000

0.50

1.300

0.50

1.300

Total

7,223.930

.

93,679.395

.

112,448.745

TABLE 1(b)

COMPANY

INCREASE /(DECREASE)
IN MARKET CAPITALIZATION DURING 15-12-07 & 06-05-08 MILLION RS.

% INCREASE /(DECREASE)

DIVIDEND PAID
2007

EARNING PER SHARE
2006-07 RS.

PRICE/
EARNING 
RATIO
2007

AUTOMOBILE ASSEMBLERS

Al-Ghazi Tractors

(939.88)

(7.50)

350%

28.63

10.20

Atlas Honda

125.34

1.30

60% 15%B

13.46

15.16

Dewan Farooque Motors

(347.60)

(34.69)

Nil

0.79

16.46

Ghandhara Industries

(319.57)

(35.71)

Nil

5.94

7.07

Ghandhara Nissan

(765.04)

(34.69)

Nil

4.16

11.78

Ghani Auto Industries

71.80

32.64

100%R

(1.97)

Negative

Hinopak Motors

(657.52)

(8.85)

240%

26.12

22.93

Honda Atlas Cars

(1,720.74)

(20.78)

100%

(3.71)

Negative

Indus Motor

(1,472.96)

(5.45)

130%

34.93

9.85

Millat Tractors

9.37

0.17

220%

33.98

8.45

Pak Suzuki Motor Co

(11,859.42)

(40.71)

50%

61.99

5.71

Saif Nadeem Kawasaki

(2.56)

(33.00)

Nil

-

-

AUTOMOBILE PARTS & ACCESSORIES

Agriauto Industries

(768.000)

(27.35)

70%

12.21

9.58

Atlas Engineering

12.337

3.23

Nil

0.05

620.00

Atlas Battery

278.302

25.68

60% 15%B

14.39

10.77

Baluchistan Wheels

(133.443)

(10.87)

20%

9.65

9.53

Exide Pakistan

37.840

3.38

25%

16.95

12.21

General Tyre & Rubber

(260.005)

(15.54)

Nil

1.05

26.67

Transmission Engineering

4.500

10.00

Nil

(6.78)

Negative

Automotive Batteries

(18.690)

(11.09)

Nil

0.74

43.24

Bela Automotive

5.800

20.00

Nil

0.25

20.00

Dewan Automotive Engg.

(49.220)

(38.33)

Nil

(15.30)

Negative

Bela Engineering

-

-

Nil

-

-

Toga Pakistan

-

-

Nil

0.14

Negative

Total

(18,769.350)

(16.69)

. . .

During the study period of last five months, the sector registered a sizeable decrease of Rs.18.8 billion (16.7%) in market capitalization. Al-Ghazi Tractors, Ghandhara Nissan Hinopak Motors, Honda Atlas Cars, Indus Motor, and Pak Suzuki were the main contributors to the decrease in absolute value. Pak Suzuki, Ghandhara Industries, Ghandhara Nissan, Dewan Farooque Motors and Honda Atlas Cars, respectively, recorded highest percentage drops. On the parts and accessories side, Agriauto Industries, General Tyre, and Balauchistan Wheels posted marked decrease in market capitalization.

FUTURE OUTLOOK

The dividend pay outs for 2007 were based on companies' performance till June 2007 when stock market was going through a smooth sailing period. The effect of subsequent events on companies' bottom lines will be known in the second half of the current calendar year. The pay outs for 2007 were mostly in line with the corresponding share prices.

The overall growth in the auto industry during the last 4-5 years has been phenomenal. Car and motor bike manufacturing outpaced the growth of more important vehicles namely tractors, trucks and buses. While cars and motor bikes also play their part in social and economic uplift of the society, high growth in the unit production of tractors, trucks and buses directly contributes to the agricultural and industrial development of the country. With the economic slowdown and high consumer finance default ratio, the car manufacturing business expansion plans have received a severe jolt. The depreciating Rupee and high oil prices have also hit the industry hard and the manufacturers have opted for price increase. This price increase shall have little bearing on luxury vehicles, but smaller cars' sales are likely to drop in consequence. . In order to sustain the growth momentum, the industry, besides catering to the needs of the domestic market, will have to develop an export oriented mix of products as well. Our presence in the auto export market is negligible due obviously to our inability to produce low cost quality autos. The public and private sectors will do well to join hands and save the industry from going into recession.

Note: This article presents an independent view and in no way carries any suggestions to invest or not to invest in any particular scrip