HUBC: 1QFY21 Result Review, (AKD, Off the Analyst's Desk, Oct 28, 2020)
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HUBC: 1QFY21 Result Review |
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· Hub Power Company Ltd (HUBC) announced 1QFY21 NPAT of PkR8.1bn (EPS: PkR6.28), up 46/20%YoY/QoQ. The earnings remained above our expectation due to higher than expected gross profit. The company also announced first interim cash dividend of PkR4.0/sh along with its result, beating consensus expectation. · The increase in 1QFY21 earnings came at the back of: (i) 12% YoY growth in topline, courtesy higher utilization of Narowal plant, (ii) PkR2.68/sh contribution from its 46% owned CPHGC plant, up 86% YoY, and (ii) 38%YoY decline in finance cost amid lower interest rates. · On the flipside, higher effective tax rate of 10% in 1QFY21 vs. 1% in the same period last year has tamed bottomline growth. · On a sequential basis, 25% QoQ dip in finance cost and lower ETR of 10% vs. 31% outweighed the impact of lower net penal income and 27% lower income from associate, leading to a sequential uptick in earnings. · HUBC has announced PkR6bn sukuk in Oct’20, which has resulted in resumption in payouts in our view. If MoUs with GoP firm up into agreements by the deadline of Feb’20, payouts from the IPP could sustain in 2HFY21. · We have a Buy stance on HUBC with our TP of PkR160/sh, implying an upside of 97% at last close.
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Hub Power Company is a holding company. Through its subsidiaries, Co. is engaged as a power producer in Pakistan that focuses on developing, owning, operating and maintaining power stations. Co. supplies electricity to Water and Power Development Authority and National Transmission and Despatch Company under long term Power Purchase Agreements for its Hub and Narowal plants respectively.
AKD Securities Ltd. is one of the leading securities firm in Pakistan, providing a comprehensive range of investor focused services, including equity brokerage, economic and securities research, investment banking and financial advisory services. AKD Securities accounts for more than 6% of the average daily value of the Karachi Stock Exchange. AKD Securities was the first brokerage house to launch an online trading platform in Pakistan in November 2002 and now has the largest market share with over 6000 customers. This has helped diversify and expand the retail investor base in the country and ushered in a whole new universe of investors to the stock market.
AKD Securities Ltd. caters to a diversified group of domestic and international institutional investors, high net worth individuals and upscale retail clients, including expatriate Pakistanis. With high quality research, unparalleled execution and distribution capability for both regular and large block trades, AKD Securities Ltd. has earned an outstanding reputation in the Pakistani securities industry.Outside of commercial banks, AKD Securities Ltd. is one of the biggest capital market firms in the country. AKD Securities is the leader in raising and providing risk capital in underwriting, market making and mergers and acquisitions in Pakistan. Good corporate governance and professionalism are emphasized throughout the firm and AKD Securities Ltd. is amongst the very few companies to have introduced a firm-wide comprehensive CODE of ETHICS, overseen by an independent compliance manager.Ultimately, our success is based on the quality of service we provide to our customers and the trust and confidence reposed in us by them. Our focus, therefore, remains on customer satisfaction at all levels in the company.
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