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NCPL - FY23 Analyst Briefing takeaways, (AKD Off the Analyst's Desk Oct 25, 2023)

AKD, Off the Analyst's Desk

NCPL - FY23 Analyst Briefing takeaways,

 

Nishat Chunian Power Ltd (NCPL) conducted its analyst briefing today to present investors with updates on their FY23 result and offer insights into the future outlook:

• Company’s long-term debt was paid off back in 2020, leading to a reduction in capacity tariff following retirement of debt component. Fast forward to 2021, company entered into a master agreement with the GoP which resulted in certain changes to tariffs of the IPPs under 1994 & 2002 policies, subsequently offering the GoP relief in terms of reduced capacity payments.
• Company delivered 386Gwh during the outgoing year (vs. 882Gwh during FY22), resulting in load factor of 22.5% for FY23 (FY22: 51.5%). Company’s gross capacity stands at 200MW and primary fuel is RFO while HSD serves as the backup fuel.
• Management stated that decision to withhold dividends during the current year was largely to manage working capital cycles more effectively. Furthermore, in light of record high interest rate in the country, company remained steadfast in deleveraging itself by paying down short term borrowings to PkR975mn, down 91%YoY (vs. PkR10.8bn in FY22). Overall, decision to continue its regular policy in the future remains intact.
• Company maintained minimum RFO inventory levels (enough to meet near-term demand) in order to keep working capital requirements to a minimum.
• With regards to falling admin expenses compared to the previous year, management stated that they have implemented cost-cutting measures (including legal fees), resulting in better operational efficiency.
• RFO generation remains on a downward trend due to the demotion of the unwanted fuel oil-based generation in the NTDC’s merit order. Hence, forecasting future demand from the power purchaser remains difficult.
• GoP’s efforts to reduce T&D and recovery losses have yielded positive results, as total losses have been curtailed to 29.24% in FY22 vs. 33.04% in FY18. Additionally, recent increase in electricity tariffs have improved cashflows for the power generation companies, resulting in unchanged trend in the power circular debt stock.
• Furthermore, talks of privatization of DISCOs, along with consideration of proposal for wheeling of electricity from power plants towards bulk consumers is encouraging for the viability of the generation sector.

 

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