HUBC_2QFY23 Result Review,(AKD Off the Analyst's Desk Feb 27, 2023)
AKD, Off the Analyst's Desk
HUBC: 2QFY23 Result Review
The Hub Power Company (HUBC) announced its 2QFY23 earnings earlier today, where the company reported earnings of PkR13.3bn (EPS: PkR10.3) for the quarter, recording its highest ever quarterly profit. This takes cumulative earnings for the half year to PkR22.4bn, up by 83%YoY.
- Net Sales for the quarter clocked in at PkR25.1bn (down 15%QoQ) as the Hub plant remained non-operational during the quarter, while the new TEL plant has contributed heavily to the company’s topline.
- Gross profit for the quarter has clocked in at PkR12.9bn, up by 61%YoY and 32%QoQ. Gross margins for the company have increased to 51% vs. the 33% recorded in the previous quarter as the inefficient RFO plants generated a sum of merely 19GWh.
- HUBC has recorded a bumper share of profit from associates of PkR10.0bn for the quarter, an increase of 223%QoQ compared to PkR3.1bn in 1QFY23. We believe this is due to a one-off adjustment of CPHGC along with increased earnings from SECMC. Furthermore, operations of ENI Pakistan are also consolidated under this since the transaction has been completed.
- Finance costs for HUBC have increased two-fold in the quarter, clocking in at PkR4.8bn vs. the PkR2.3bn recorded in 1QFY23. Higher interest rates (KIBOR & LIBOR) along with the addition of debt servicing from the TEL plant have contributed to this.
- The company has also announced a dividend of PkR5.75/sh for the quarter, higher than our expectations and likely on the back of a payout received by CPHGC from CPPA-G on its outstanding receivables. This takes cumulative payout for 1HFY23 to PkR21.25/sh, amounting to a payout ratio of 123%.
AKD Research
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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