Report
EUR 9.28 For Business Accounts Only

Pakistan Power_ Load factors for efficient plants to improve, (AKD Daily, Jan 08, 2020)

Pakistan Power: Load factors for efficient plants to improve,

  • Power generation in Oct’19 remained flat YoY at 9,572GWh, albeit declining 30% MoM due to seasonality factor. The sequential decline in power generation was led by lower Hydel and Furnace Oil based generation. The share of hydel and FO based generation sliced to 25.5/0.2% vs. 37.1/6.0% in Sep’19.
  • On a YoY basis, the coal power capacities pushed gas and furnace oil based generation down the merit order. To note, HUBC base plant’s remained non-operational in Oct’19. Low demand season, coupled with cheaper generation availability, also rendered the more efficient Nishat IPPs and Narowal out of business during the month.
  • Reportedly, the oil refiners have approached the standing committee and petroleum division to have a separate merit order for fuel oil, and run efficient plants of about 2,000MW to ensure 7,000 to 9,000 tons per day of local Furnace Oil production offtake from the refineries in the interim period.
  • With the implementation of IMO 2020, and a decline in ex-refinery furnace oil prices, we believe the GoP may consider the aforesaid proposal, bearing good news for efficient furnace oil based power plants of NPL, NCPL and HUBC Narowal.
  • Amid this background, HUBC is still our top pick from the sector, given 42% CAGR of earnings over FY19-22, led by the upcoming coal based power capacities. On Energy Sukuk II issue, KAPCO (low payables to PSO and SNGP) and NPL (least leveraged) are likely to resume payout and may see price performance in near term.
Underlying
Hub Power Co. Ltd.

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.

Provider
AKD Securities Limited
AKD Securities Limited

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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