Pakistan Power_HUBC_A new chapter!, (AKD Daily, Sep 26, 2022)
HUBC: A new chapter!
We revise our target price for Jun’23 to PkR127.3/sh, offering an upside of 98% from last
close and a D/Y of 12.4%.
We now incorporate an average US$/PkR parity of 245/265 for FY23/FY24 and a longterm
annual depreciation of 7% (6% previously). Moreover, we foresee CPI inflation of
25% in FY23, 13%/10% in FY24/FY25, while keeping a long-term inflation rate of 9%. For
Crude Oil, we estimate the price at US$95 for FY23, US$90/US$80 for FY24/FY25 and a
long-term average price of US$70/bbl.
According to our projections, the two Thar coal plants coming online in 1HFY23 add
PkR15.4/sh (holding in TEL: 60%) and PkR9.8/sh (holding in TNPTL: 38.3%) to HUBC’s value
respectively.
We have an expectation of PkR8.0/sh in dividends for FY23 (D/Y: 12.4%), while FY24 is
expected to yield 15.5%. Although the impact of our revised assumptions is significant,
we have incorporated the build-up of circular debt for the sector as capacity payments
increase, hence keeping the impact on our valuation modest as cashflow is hampered.
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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