HUBC_One-off lead to below expected 2QFY20 EPS of PkR4.23, (AKD, Off the Analyst's Desk, Feb 25, 2020)
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HUBC: One-off lead to below expected 2QFY20 EPS of PkR4.23 |
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§ Hub Power Company Ltd (HUBC) announced 2QFY20 consolidated NPAT of PkR5.5bn (EPS: PkR4.23), up 100%YoY. This takes 1HFY20 NPAT to PkR11.0bn (EPS: PkR8.52), up 2.0xYoY. Deviations from our expected earnings comes from ‘loss of shares to be transferred to GoB’ of PkR1.0bn (EPS impact: PkR0.77) recorded in 2QFY20. To recall, HUBC and its Chinese partner in China Power Hub Generation Company Ltd (CPHGC) each had to transfer 1.5% of stake to GoB. § Despite the one-off, the increase in 2QFY20 NPAT is led by (i) 53%YoY increase in gross profits led by 16%YoY rupee devaluation and, (ii) higher share of profits from 46% held China Power Hub Generation Company Ltd (CPHGC) and SECMC (PkR3.3bn; EPS impact: PkR2.52). Meanwhile, 98%YoY higher finance cost remained the major drag in bottomline growth. § On a sequential basis, the impact of new coal based power plant running at full capacity was more visible in 2QFY20, which commenced operations mid 1QFY20 (EPS: PkR1.44 contribution to 1QFY20 NPAT). However, one-off recorded in 2Q neutralized the impact, keeping sequential earnings growth flattish. § HUBC did not announce any interim dividends, in line with our expectations, and is likely to delay payouts until FY20 end, as it manages to complete 100% of CAPEX financing of its 2x330MW local coal power projects. Our TP of PkR161/sh offers and upside of 69% at last close, implying a 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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