KAPCO & HUBC: FY19 Result Previews
KAPCO: Kot Addu Power Company Ltd (KAPCO) is expected to announce its FY19 result on 29th August’2019, where we expect the company to post earnings of PKR17.2bn (EPS: PKR19.51), up 62% YoY due to hefty true-up income recorded during the period (EPS impact: PKR4.68). Excluding one-off, FY19 earnings are expected to post an increase of 23% YoY driven by 23% YoY average PKR devaluation. For 4QFY19 alone, KAPCO is expected to post 17/36% YoY/QoQ higher NPAT of PKR4.7bn (EPS: PKR5.35). On YoY basis, higher capacity payments (20% weaker PKR on average) will be partially offset by 48% YoY lower ‘Other Income’, due to true-up income of PKR2.9bn in 4QFY18. However, we do not anticipate any payouts from the company during the quarter, especially if the Sukuk issuance gets delayed beyond Aug’19. This will keep KAPCO’s full year payouts at PKR1.5/sh for FY19 vs PKR9.15/sh during FY18. However, the overdue payables to PSO stand at PKR2bn as of Mar’19, which may result in continuation of payouts post Sukuk issuance.
HUBC: We expect Hub Power Company Ltd (HUBC) to close the financial year on a weak note, with 4QFY19F consolidated NPAT expected at PKR2.2bn (EPS: PKR1.89), down 21/31% YoY/QoQ. This will take FY19 earnings to PKR10.76bn (EPS: PKR9.30), flattish on a YoY basis. The decline in 4QFY19F earnings is likely to come from 93% YoY increase in finance cost due to CAPEX financing and higher interest rates. HUBC opted for short term borrowing to increase its stake in 1,320MW CPHGCL project during 4QFY19 (deadline to exercise call option was before CoD of 1,320MW), as funds raised through the recent PKR7bn Sukuk were expected to materialize mid-July. For full year FY19, 63% YoY higher finance cost is expected to be partially offset by the PKR devaluation impact, keeping the bottomline decline at 3% YoY. We do not expect the company to pay announce any cash dividend due to liquidity constraints – cash from the first Energy Sukuk was entirely used to retire payables to PSO.
AKD Research
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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