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HUBC_FY23 Analyst Briefing takeaways, (AKD Off the Analyst's Desk Sep 21, 2023)

AKD, Off the Analyst's Desk

HUBC: FY23 Analyst Briefing takeaways

 

Hub Power Company Limited (HUBC) held its analyst briefing earlier today, where-in the management discussed the following:

 

• Company’s newly commissioned subsidiaries i.e. TEL and TNTPL's load factors stood at 53%/78% during the year, with their positions within NTDC’s merit standing in top five presently. Overall, the availability of all the company’s power projects remained consistently over 90% during the year.
• Major reason for sharp increase in consolidated profitability was due to several factors including the incorporation of subsidiaries (TEL, TNTPL, and Prime) during the year, the devaluation of the local currency, and one-off insurance settlements received by CPHGC.
• CPHGC’s profitability resurged substantially during the year, largely due to better availability factor and receipt of an insurance claim amount during the period. This is in contrast to the subsidiary being adversely affected when the power plant's transformer tripped in July'21 due to adverse weather conditions.
• Balance of the insurance settlement received by CPHGC was to the tune US$30mn during the quarter, leading to a significant increase in profit from associates.
• Management anticipates CPHGC to commence paying dividends in FY24, given that the power plant achieved project completion during the outgoing year.
• Company is in the process of developing wastewater recycling initiatives for industrial usage in Karachi. While the feasibility study is complete, the overall progress remains very slow due to delays with regards to approvals from the local government.
• Company’s newly acquired E&P subsidiary i.e. Prime International Oil and Gas Ltd (previously ENI) produced 10.7 MN BOE during FY23.
• Company’s management firmly rejected the possibility of debt tenure extension (specifically for CPEC based projects), citing that any move to re-profile existing project debts would negatively impact sovereign relations with our lending partners, and eventually harming future FDI.
• Dollar indexation remains to be discontinued for IPPs under the 1994 and 2002 policies, presently locked at PkR168/USD, majorly affecting HUBCO’s base and the Narowal plants.
• Utilization of surplus retained earnings hinges on future CAPEX plans and borrowing/leverage situation.
• The project completion of the TEL and TNTPL power plants depends on various factors, including but not limited to the achievement of several milestones set by the lenders and the determination of tariff true-up by NEPRA. Given these complexities, it is challenging to establish a definitive timeline for project completion.