Impact of JAC T9 Hunter on GAL stock

Ghandhara Automobiles Limited’s (GAL) strategic entry into the pickup truck market with the launch of the JAC T9 Hunter is marked by appealing aesthetics and competitive pricing. This positions it as a strong contender, challenging the established market leader, according to the latest report released by Sherman Securities.

Replacing the Chery PHEV in their earnings forecasts for FY25, they have adjusted the consolidated EPS, reducing it by 9% to Rs40 from Rs 44.3. The truck segment remains a significant contributor to GAL’s overall earnings, leading them to reduce the DCF-based target price for GAL to Rs425 per share, incorporating the T9 Hunter. The stock price is currently at Rs. 450, which means it has already priced in much of the growth from the JAC T9.

The pick-up market, historically hovering between 4,000 to 7,000 units, saw sales peak at 11,000 during FY22. Sales dropped to 3,158 units during FY24 but recovered to 2,030 units in 1HFY25. The launch of the JAC T9 Hunter is timely, benefiting from lower inflation and declining interest rates.

Sherman Securities projects T9 Hunter sales to reach 750 units in FY25, 1,000 units in FY26, and 1,200 units in FY27, capturing a 15%-20% market share. The strong demand for the T9 Hunter is driven by its premium features, aggressive aesthetics, and competitive price point.

They expect the T9 Hunter’s gross margin to be around 9% at the current price point, improving to 11% by FY26. The T9 Hunter is projected to contribute to EPS by Rs5.82, Rs10.3, and Rs12.9 during FY25-FY27. Improved economics will drive JAC and Dongfeng truck sales growth, with JAC’s segment expected to achieve 44% sales growth in FY25 and 30% in FY26.

Dongfeng’s sales are projected to reach 542 units in FY25, growing by 10% annually in FY26 and FY27. Both segments are significant contributors to the company’s bottom line, with projected EPS contributions and gross margins.

JAC International boasts a diverse product portfolio, including trucks, fuel-engine SUVs and sedans, as well as electric SUVs, sedans, and trucks. Initially, GAL focused on assembling JAC’s trucks, including the X-series and N-series. Recently, GAL has expanded the JAC product lineup in Pakistan by launching the JAC T9 Hunter in the pickup segment. The SUV segment includes seven variants under the JS brand, while the sedan lineup includes two variants under the J7 brand. In the electric vehicle segment, JAC offers an electric sedan, car, SUV, and truck, showcasing innovation in clean energy solutions and highlighting GAL’s potential to expand in Pakistan.