HUBC_3QFY21 EPS of PkR6.61 – (above expectation) , (AKD, Off the Analyst's Desk, April 30, 2021)
HUBC: 3QFY21 EPS of PkR6.61
– (above expectation)
Hub Power Company Ltd (HUBC) announced higher than expected 3QFY21
NPAT of PkR8.6bn (EPS: PkR6.61), up 19/5% YoY/QoQ. This takes the 9MFY21
NPAT to PkR24.92bn (EPS: PkR19.21), up 37%YoY.
For 3QFY21 alone, a steep 39%YoY decline in finance cost amid low interest
rates was somewhat offset by higher effective tax rate of 12% vs. 6% in the
same period last year (25% WHT on dividend income from 46% owned
CHPGC). However, 7%YoY higher contribution from CHPGC resulted in 19%YoY
increase in earnings.
For 9MFY21, the 37%YoY increase in earnings was led by 40%YoY decline in
finance cost, 30% YoY higher contribution from China Hub Power Generation
Company (CHPGC) and absence of PkR1.0bn recorded in lieu of transfer of
share of 1.5% stake in CPHGC to GoB in the same period last year.
The result announcement did not accompany any payout, as opposed to
PkR7.0 DPS in 1HFY21, where dividends were resumed after a dry spell of two
years. Going forward, (i) first installment encompassing 40% of receivables
settlement, (ii) dividend commencement from CHPGC in May’21 as per
management guidance and (iii) HUBC’s acquisition of ENI’s assets in Pakistan
would be determining factors in payout situation.
Our SoTP of HUBC (excluding Base plant) of PkR110/sh offers an upside of
46% at last close, implying Buy stance.
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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