From the vantage of the local tractor industry, key variables to watch out for in the upcoming Budget are VAT implementation, the GoP’s tractor schemes and agri-credit disbursement target. Where the implementation of VAT may raise prices, thereby hampering demand, we believe the GoP’s tractor schemes will likely shift tractor demand back to normal. We further expect VAT to have a beneficial cash flow impact for local tractor manufacturers, by solving outstanding tax refund issues. We also expect the GoP to raise the agri-credit disbursement target this year. Finally, local manufacturers stand to benefit immensely if the GoP imposes a tax on imported tractors. At present, MTL and AGTL are trading at a trailing P/E of 11.6x and 5.2x, respectively. We are currently in the process of initiating coverage on both MTL and AGTL and will release a detailed report soon.