Pak Suzuki board approves PSX delisting

Pak Suzuki Motor Company – a Japanese carmaker in Pakistan – on Thursday announced that its board of directors had approved voluntary delisting of the company from the Pakistan Stock Exchange (PSX), as persistent losses and no dividends for shareholders left no reason to stay at the bourse.

In a notification sent to the PSX, the company said it would soon submit a formula to determine the price for share buyback from the general public. “PSX and the Securities and Exchange Commission of Pakistan (SECP) may guide in this regard.”

Pak Suzuki reported a net profit of Rs3.80 billion for the third quarter ended September 30, 2023, which reflected a turnaround from the net loss of Rs2.59 billion reported for the same quarter of last year.

The profit or loss account numbers suggested that increase in car prices and a surge in sales volume helped the company to return to profit by offsetting the impact of rupee depreciation and rise in prices of imported parts.

In the first nine months (Jan-Sept) of 2023, however, the company posted a net loss of Rs5.87 billion, which was more than double the loss of Rs2.51 billion recorded in the same period of last year.

Pak Suzuki said its board of directors had resolved to delist the company from the PSX. “The company shall submit a formula application to the PSX and for which Suzuki Motor Corporation, the majority shareholder of the company, has been authorised to buy back ordinary shares held by minority shareholders of the company to an extent and at a price to be determined in accordance with the regulations or as may be determined by the PSX or the SECP.”

The majority shareholder intends to obtain full ownership of the company by purchasing all outstanding shares, as “the operations of Pak Suzuki resulted in loss in 2019, 2020 and 2022. It has also resulted in a loss up to the third quarter of this year,” the notification read.

“From 2019, dividends have not been paid to shareholders except for 2021. The current share price of Pak Suzuki is at a historically low level and the number of daily transactions/ sales is limited.”

It added “in the Suzuki global strategy, Pakistan remains one of the most important markets and Suzuki is fully convinced of the future potential of Pakistan.”

Upon acceptance of the application for delisting, in accordance with the Rule Book, a general meeting of shareholders of the company will be convened and held within 30 days of an agreement with the PSX on the minimum purchase price to seek approval through a special resolution for the delisting.

Commenting on the turnaround in Pak Suzuki’s bottom line in Q3 and reduction in losses for nine months, Topline Research analyst Sunny Kumar said “the results came in higher than industry expectations due to higher-than-expected gross margins.”

The research house had estimated gross margins of 12% for the third quarter, however, actual margins came in at 14%. “These gross margins are also higher than the previous quarter’s 10% due to rupee appreciation.”

Published in The Express Tribune, October 20^th, 2023.

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