Pak Suzuki board approves PSX delisting
Pak Suzuki Motor Company, a Japanese automaker in Pakistan, stated on Thursday that its board of directors had authorized the company’s voluntary delisting from the Pakistan Stock Exchange (PSX), citing the lack of any shareholder dividends and ongoing losses as reasons for the decision.
The business informed the PSX that it will soon submit a formula to establish the cost of repurchasing shares from the general public. In this regard, the Securities and Exchange Commission of Pakistan (SECP) and PSX may provide guidance.
In contrast to the net loss of Rs2.59 billion reported for the same quarter last year, Pak Suzuki reported a net profit of Rs3.80 billion for the third quarter that concluded on September 30, 2023.
According to the profit or loss account figures, the company was able to earn a profit by countering the effects of rupee devaluation and rising import part prices with an increase in car pricing and a boom in sales volume.
However, the business reported a net loss of Rs5.87 billion in the first nine months (Jan.-Sept.) of 2023, more than double the loss of Rs2.51 billion in the same period the previous year.
According to Pak Suzuki, the company’s board of directors decided to remove it from the PSX.
Suzuki Motor Corporation, the majority shareholder of the company, has been given permission to repurchase ordinary shares held by minority shareholders of the company to the extent and at the price to be determined in accordance with the regulations or as may be determined by the PSX or the SECP. The company shall submit a formula application to the PSX.
The dominant shareholder wants to buy all of the company’s shares because “the operations of Pak Suzuki resulted in loss in 2019, 2020, and 2022,” and they want to own the entire business. Additionally, a loss was incurred up until the third quarter of this year, according to the notification.
Dividends have not been paid to shareholders since 2019, with the exception of 2021. The share price of Pak Suzuki is currently at a historically low level, and there aren’t many sales or transactions every day.
Suzuki is completely certain of Pakistan’s future potential, and it said, “Pakistan remains one of the most important markets in the Suzuki global strategy.”
A general meeting of shareholders of the company will be called and held within 30 days following an agreement with the PSX on the minimum purchase price in order to seek approval through a special resolution for the delisting once the application for delisting is accepted in line with the Rule Book.
According to Topline Research analyst Sunny Kumar, who was commenting on Pak Suzuki’s improvement in the third quarter and decrease in losses over the previous nine months, “the results came in higher than industry expectations due to higher-than-expected gross margins.”
For the third quarter, the research firm predicted gross margins of 12%; however, actual margins were 14%. Due to the strengthening of the rupee, these gross margins are also greater than the 10% of the prior quarter.
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