HUBC - The gift that keeps on giving, (AKD Daily Nov 07 2023)
AKD Daily
HUBC - The gift that keeps on giving
- We revisit our investment case on Hub Power Company Ltd (HUBC), which posted an eventful FY23, marked by the announcement of record dividends of PkR30/sh, yielding an average of 34.5% during the year
- With both the issues pertaining to ‘Energy Revolving Fund’ account (tied to conditions by CPHGC sponsors) and final tariff determination by the power regulator resolved during the outgoing year, being prerequisites for cash payouts, we expect the affiliate company to begin with a modest payout of PkR5.0/sh during FY24.
- With both indigenous coal based power plants coming online in FY23, they are expected to deliver cumulative ROE contributions of ~PkR9/10bn during FY24/25, respectively.
- Overall, we have a ‘Buy’ call on HUBC with a June’24 Target Price of PkR155/sh, providing an upside of 45% over last close. Additionally, we estimate dividend yields for FY24/25 at 21%/30%, culminating to a total return of 67% from last close.
AKD Research
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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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