Pakistan Power_The much awaited first tranche finally arrives!, (AKD Daily, Jun 07, 2021)
AKD Daily
Pakistan Power: The much awaited first tranche finally arrives!
- In the first installment of latest circular debt clearance, Government has settled 40% of the overdue receivables of PkR200bn for listed IPPs while the remainder receivables are expected to be settled by Dec’21.
- In case of KAPCO, which has received ~PkR39bn in settlement, it will most likely divert some portion of the settlement amount in clearing liabilities (taking cue from Energy Sukuks). A downside risk to payouts is fixed cost during the extended PPA term, where GoP will not pay KAPCO any capacity payments.
- In case of PKGP, low working capital requirement, due to non-operating furnace oil plant, in contrast provides more room for payouts. Assuming IPPs use PIBs and Sukuks to settle their liabilities, cash received by ALTN/PKGP would translate into a potential dividend yield of 21.0/20.9% at last close.
- From the amount received, we expect HUBC to settle PkR9.3bn of payables to PSO however with only one-third of them in cash, we do not expect a significant payout from PSO given short term borrowings standing at PkR96.8bn. However, any receipt of late payment surcharge or settlement of LNG receivables can provide PSO the liquidity for a significant payout, in our view.
AKD Research
Pakistan State Oil is a petroleum group based in Pakistan. Co.'s principal activities are the procurement, storage and marketing of petroleum and related products. Co. also blends and markets various kinds of lubricating oils.
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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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