HOUSEHOLD APPLIANCES. December 2016

Transcription

1 HOUSEHOLD APPLIANCES December 2016

2 Domestic Industry Manufacturing Manufacturing & Mining at end-fy16 Small Scale Manufacturing (13%) Large Scale Manufacturing (80%) Slaughtering (7%) Textile Food, Beverage & Tobacco Coke & Petroleum Products Iron & Steel Products Non-Metallic Mineral Products Automobiles Fertilizers Pharmaceuticals Paper & Board Electronics Manufacturing Sector: 13.3% of GDP 14.2% of employed labor force Large Scale Manufacturing: 10.6% of GDP 80% of Manufacturing Sector Large Scale Manufacturing - Top 10 Groups Weight - Quantum Index of Manufacturing 1 Textile 20.9% 2 Food, Beverages & Tobacco 12.4% 3 Coke & Petroleum Products 5.5% 4 Iron & Steel Products 5.4% 5 Non-Metallic Mineral Products 5.4% 6 Automobiles 4.6% 7 Fertilizers 4.4% 8 Pharmaceuticals 3.6% 9 Paper & Board 2.3% 10 Electronics 2.0% Source: Pakistan Economic Survey Manufacturing & Mining -

3 Domestic Industry Production # of units Rising production of home appliances in Pakistan Refrigerators production increased by 10% in 9MCY16 Rise in the production of Air Conditioners and Deep Freezers by 45% and 20% in 9MCY16 Home Appliances Pakistan Production 1,800,000 1,700,000 1,600,000 1,550,000 1,475,000 1,400,000 1,325,000 1,248,000 1,200,000 1,000, , , , , , , , , , , , , , ,000 0 CY12 CY13 CY14 CY15 9MCY16 Refrigerators Air conditioners Deep Freezers Source: Industry Players

4 Domestic Industry Demand Outlook Factor Status Pakistan Urban Population GDP Growth FY15: 4.2% FY16: 4.7% Population FY15: ~190mln FY16: 193mln GDP Per Capita Urban Population Average Persons per Household Number of Households FY15: USD 1,514 FY16: USD 1,563 FY15: 38.6% FY16: 39.9% 6.4 (Urban: 6.2; Rural: 6.5) 29mln 44% 42% 40% 38% 36% 34% 32% 30% 40% 39% 38% 38% 37% 37% 37% 36% 36% 35% 35% 35% FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 Improvement in standard of living High potential for demand growth of home appliances Sources: Pakistan Demographic and Health Survey Industry Players

5 Domestic Industry Competitors 40% 37% 35% 35% Pakistan Refrigerator Market Share 30% 25% 26% 23% 20% 15% 14% 14% 14% 14% 10% 5% 7% 7% 4% 4% 0% Dawlance PEL Haier Orient Waves Others CY14 9MCY16 Refrigerator: Top 3 players dominates 74% market signifying high concentration Largely sustained system shares Air Conditioner: Sharp rise in the share of Digital World while decline has been observed in shares of Orient, Haier, and Dawlance Decline in the share of top 3 players; 9MCY16: 57%; 2014: 68% 30% 25% 20% 15% 10% 5% 0% 15% 21% Digital World (Gree) Pakistan Air Conditioners Market Share 23% 19% 26% 17% 19% 15% 10% 10% Haier Orient Dawlance R&I Electrical Appliances (Kenwood) CY14 9MCY16 5% 9% PEL 2% 5% Changhong Ruba Source: Industry Players 0% 4% Others

6 Domestic Industry Key Developments Arçelik AS, a Turkish player in the home appliances industry, acquired Dawlance, Pakistan for an amount of USD 258mln. The Group operates fifteen manufacturing plants in Turkey, Romania, Russia, China, Republic of South Africa and Thailand. The Company is controlled by Koç Holding A.Ş., the parent company, Koç Family and the companies owned by Koç Family The company has total asset base of USD 4,414mln and an equity of USD 339mln. Impact Neutral to Positive With the entrance of a European player, the industry would face healthy competition in terms of Research & Development. It is also expected to introduce new technology in the home appliances. Owing to strong presence of domestic players, this deal is not likely to have any major impact on the current market share of the players.

7 Domestic Industry Outlook Outlook Positive + Growing urbanization and standard of living + Higher disposable income + Low product penetration room for growth - Depreciation of PAK Rupee higher cost of production

8 Analysts Aisha Khalid Manager Ratings Rana M. Nadeem Unit Head Ratings Contact Number: DISCLAIMER PACRA has used due care in preparation of this document. Our information has been obtained from sources we consider to be reliable but its accuracy or completeness is not guaranteed. The information in this document may be copied or otherwise reproduced, in whole or in part, provided the source is duly acknowledged. The presentation shouldnot be relied upon as professional advice.