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HUBC & NPL 3QFY24E Result Previews, (AKD Daily Apr 25, 2024)

AKD Daily

HUBC & NPL 3QFY24E Result Previews

HUBC – 3QFY24E earnings to clock in at PkR12.42/sh: We expect Hub Power Company Limited (HUBC) to post NPAT of PkR16.1bn (EPS: PkR12.42) in the third quarter of FY24, up 5%/43% on QoQ/YoY basis. The aforementioned increase in earnings on a quarterly basis is primarily attributed to higher gross margins, resulting from the non-utilization of fuel oil-based plants (Narowal and HUBCO-base utilization: nil/69 Gwh during 3QFY24). Generation profile of the company’s power plants were as follows: Hubco Base (0 Gwh), CPHGC (0 Gwh), TEL (369Gwh, ↓36%QoQ), NEL (69Gwh, ↑8.6xQoQ), TNPTL (492Gwh, ↑13%QoQ) and LEL (95Gwh, ↓32%QoQ). Overall, we expect company to post revenue of PkR29.4bn (-2%/+8% QoQ/YoY), largely stable on a quarterly basis amidst unchanged generation profile of the company as a whole (total HUBC utilization: 8.6% during 3QFY24 vs. 8.5% in the quarter before). On the non-operating front, Share of Profit from associates is expected to clock in at PkR10.8bn (up 2%QoQ/66%YoY) during the outgoing period. Finally, we expect the company to announce an interim dividend of PkR4.0/sh in the quarter, taking total payout during 9MFY24E to PkR13.0/sh (vs. PkR24/sh in SPLY). Overall, HUBC remains our top pick inside the power generation space, with a Dec’24 TP of PkR160/sh, alongside promising dividend yields of 14%/21% for FY24/FY25, respectively.

 

NPL – 3QFY24E earnings to clock in at PkR3.20/sh: We anticipate Nishat Power Limited (NPL) to report NPAT PkR1.13bn (EPS: PkR3.20) for the third quarter of FY24, up 32%/36% on QoQ/YoY basis. The aforementioned increase in earnings on a quarterly basis is primarily due to improved gross margins resulting from cost savings (assumed generational efficiency of 42%) and augmented earnings from non-operating income (ST Investments as of Dec’24: PkR5.1bn). With regards to operations, plants utilization factor stood at 21% (vs. 6%/14% during 2QFY24/SPLY), primarily driven by increased generation from RFO sources due to the reduced availability of Hydel during the late winter season. Overall, we have a ‘Buy’ call on NPL with a Dec’24 Target Price of PkR40/sh, providing an upside of 25% over last close. Additionally, we estimate dividend yields for FY24/25 at 19%/22%, culminating to a total return over 40% over these periods.