Sazgar Dominates SUV Market with HAVAL

Staff Report:
Sazgar Engineering Works Limited (SAZEW) has gained significant attention in the auto sector by introducing the Haval SUV brand in August 2022 through a joint venture with Great Wall Motors (GWM), China’s eighth-largest automobile manufacturer.

Besides dominating the SUV market, Sazgar already has a well-established 3-wheeler rickshaw brand alongside its automotive parts segment. With the highest gross margin in the industry (due to its cost efficiency and tax exemption on auto parts), we expect Sazgar’s earnings to remain robust in the near term despite competition from new entrants in the hybrid SUV market, thanks to its successful brand, HAVAL.

Sazgar Engineering to Announce FY24 Results, Profit Expected at Rs7.3bn

Despite delivering an exponential return of 462% in the past year, Sazgar trades at a compelling FY25 PE ratio of 4.4x compared to the auto sector’s trailing PE of 9x.

SUV Market Growth to Continue: Haval Leading the Segment
Pakistan’s SUV market has doubled to 16,000 units (up 2x YoY) during FY24. We project SUV sales to reach 25,000 units (up 60% YoY) during FY25.

In the hybrid SUV market, which emerged during FY24, sales reached 14,500 units, with Sazgar selling 5,300 units and capturing a 45% market share, leading the segment during FY24. Furthermore, we expect hybrid SUV sales to reach 20,000 units (up 73% YoY) during FY25, with Sazgar’s sales estimated to grow to 9,000 units,’ Sherman said in a report.

While competition in the hybrid SUV segment is expected to intensify with new entrants such as the MG HS PHEV, Honda HR-V HEV, and Kia Sportage HEV launching during FY25 and FY26, we believe Sazgar will maintain its leading market share due to its strong brand, HAVAL. The company has outlined a Capex plan of Rs. 4.5 billion for FY25.