Karachi August 12 2024: Sazgar Engineering Works Limited, the manufacturer of HAVAL vehicles in Pakistan, saw its stock price drop by more than 4 percent on the Pakistan Stock Exchange after BYD announced its entry into the Pakistani market.
BYD, in collaboration with the country’s largest power producer, Hub Power Company Limited, is set to launch its cars in Pakistan on this weekend.
Over the past year, SAZGAR’s stock delivered a remarkable 1392% return, attracting interest from frontier funds investing in the Chinese-partnered automaker.
In July, the Evli Emerging Frontier B fund acquired stake in a USD 150 million Pakistani vehicle manufacturer SAZGAR, a transaction reflected in its July 31st monthly report. The report highlighted the company’s recent success in producing a hybrid model under a Chinese brand.
SAZGAR witnessed a substantial rise of more than 6 times Year on Year in the sale of HAVAL vehicles in July 2024, with 825 units sold compared to the sales of 135 vehicles in the same month last year, according to company filing at Pakistan Stock Exchange today.
However, the imminent entry of Chinese electric vehicle (EV) giant BYD into Pakistan has raised concerns about SAZGAR’s sales sustainability. BYD is poised to make its official debut in the country on August 17th, partnering with Mega Motor Company (Private) Limited, a subsidiary of Hub Power Company Limited (HUBCO).
In anticipation, Hub Power’s stock surged by 2.71 percent in today’s trading on the Pakistan Stock Exchange (PSX).
Arif Habib Limited analysts Muhammad Abrar and Menka Kirpalani have initiated coverage of Sazgar Engineering Works Limited (SAZEW) with a “SELL” recommendation and a target price of PKR 935 per share by June 2025. They cited sluggish sales growth post-FY25, unsustainable gross margins due to the expiration of auto policy benefits, and a projected slowdown in earnings growth to 10% YoY in FY26 as key reasons for the downgrade.
