HUBC_FY20 EPS up 2.23x YoY, (AKD, Off the Analyst's Desk, Aug 19, 2020)
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AKD Research - Off the Analyst's Desk |
Aug 19, 2020 |
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HUBC: FY20 EPS up 2.23x YoY (Above Expectations) |
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Hub Power Company Ltd (HUBC) announced 2.23xYoY higher FY20 NPAT of PkR25bn (EPS: PkR19.31). The increase in earnings is attributable to (i) 24% PkR devaluation and, (ii) contribution of PkR13bn (EPS impact: PkR10.56; approx. 50% of FY20 EPS) from 1,320MW coal fired power plant, which commenced operations in Aug’20. On the flipside, (i) 61% YoY higher finance cost, and (ii) effective tax rate of 13% in FY20 vs 4% in FY19, were a drag on bottomline growth. For 4QFY20 alone, the earnings posted a slight decline of 6% QoQ, clocking in at PkR6.8bn (EPS: PkR5.24), largely led by higher tax during the quarter (ETR at 31% vs. 6% in 3QFY20). On PBT basis, earnings posted an increase of 32% QoQ, driven by 25% QoQ higher profit from CPHGC and 18% QoQ lower finance cost, courtesy discount rate cut. The company did not announce any dividend in 4QFY20, making FY20 second consecutive year without a payout. We await management’s comment on higher than expected taxation before incorporating the same in our estimates. The result clocked in above expectation, with higher than expected profit from associate resulting in earnings beat. Our TP of PkR160/sh implies a Buy stance at last close. However, we advise investors to maintain a cautious stance until further clarity emerges on the fate of HUBC’s base plant and CPEC projects. |
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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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