Pak Suzuki Motor Company Limited: 1QCY15 EPS to increase by 2.2x to PKR11.9/share: PSMC is scheduled to announce 1QCY15 results on April 24, 2015, in which we expect the company to report net income of PKR983mn (EPS PKR11.94), up by 2.2x QoQ. Wherein, growth in bottom-line is likely to stem from i) 66% higher unit sales and ii) ~300bps gross margins expansion due to JPY depreciation. During the quarter, car sales jumped to 31k units due to calendar year effect and Punjab taxi scheme. We estimate around 13k taxi sales during the period under consideration. Further, gross margins accretion to 9.8% is likely to emerge from steep JPY depreciation of 5% QoQ. Just to highlight, 4QCY14 margins clocked in at 6.8% (much lower than street consensus) due to write down of inventory worth PKR367mn. In addition, we have also considered an adjustment of taxi scheme discount towards the gross margins.

INDUS: 3QFY15 result preview – Eyeing towards immense profits: The board of directors of Indus Motor Co. is scheduled to meet on April 29, 2015 to declare 3QFY15 financials, in which we eye 36% QoQ profitability rise to PKR2.7bn (EPS PKR34.9) primarily due to 33% higher car sales and 103bps margins expansion. During the quarter, total company car sales remained at 17.3k units vs. 13k units in 2Q. We attribute the higher unit sales to new model fever, calendar year effect. As a result, sales revenues would increase by 33% QoQ to PKR29bn. Further, JPY depreciation would result in 110bps margins expansion to 14.6%. Though the magnitude of JPY depreciation warrants larger margins expansion, high inventory levels would limit the growth.

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