Pak Suzuki Motor Company (PSMC) made an announcement on Thursday in a notice to the Pakistan Stock Exchange (PSX). They stated that they will evaluate and consider the majority shareholder’s desire to acquire all remaining shares of the company. Subsequently, PSMC plans to delist from the PSX.
Pak Suzuki shocked everyone with this revelation in a notice sent to the Pakistan Stock Exchange. The notice says, “This is to inform you that (a) meeting of the Board of Directors of PSMC, will be held on Thursday, 19 October 2023 to review and consider the majority shareholder’s intent to purchase all outstanding shares of Pak Suzuki Motor Company Limited held by other shareholders and de-listing under Rule 5.14.1. of the listing regulations.”
Pak Suzuki Decision to Delist From PSX
Pak Suzuki announced that they will promptly communicate the board’s decision after the board meeting. Fahad Rauf, Head of Research of Ismail Iqbal Securities Limited, said in a statement, “The decision to delist suggests that the company is not seeing an incentive to remain listed at the bourse as compliance cost is high. The company likely believes its shares are available at a cheap valuation so they are intending to buy it.”
Following the announcement, the company’s share price reached its upper trading limit on Thursday. They had been under pressure for several months. Attributed to declining sales and substantial finance costs, PSMC previously reported losses amounting to Rs9.68 billion in the initial six months of FY2022-23.
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Pak Suzuki Challenges
Throughout the year, the company has made multiple announcements regarding the temporary closure of its vehicle and motorcycle manufacturing plants in Pakistan. The incurred loss came as no surprise to analysts, given the various challenges confronting Pakistan’s auto sector.
These challenges include elevated energy expenses, political instability, and difficulties in obtaining letters of credit for imports due to a severe dollar shortage. In recent months, several companies from various sectors have declared share buybacks, attributing them to the undervaluation of their shares.
The KSE-100 Index on the PSX has faced persistent downward pressure over the years. This is because of a multitude of factors that have deterred investment in Pakistan’s equities. The market capitalization, previously hovering around $100 billion, has dwindled to less than $26 billion at present.