Elixir Securities - K-Electric (KESC) K-Electric Limited - Reconsidered MYT Largely Unchanged; Uncertainty Still Persists

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Elixir Securities

Sharoon Ahmad

EUR 4.65 For Business Accounts Only

K-Electric Limited - Reconsidered MYT Largely Unchanged; Uncertainty Still Persists

The government’s reconsideration request for KEL’s MYT was snubbed by NEPRA as the latter tackled contentions on case by case basis making no material changes. NEPRA contended that the claim of KEL running into losses was false owing to wrong set of assumptions used by the latter. As such, the regulator projected KEL’s earnings under this MYT to stand at PKR0.71/PKR0.75 in FY17/FY18 and gradually recede to PKR0.34 by FY23.
Among the notable changes, 1) base tariff was marginally raised to PKR12.82/KWH from PKR12.77/KWH, and 2) claw back limits were pushed up slightly by average of 0.27ppt across the control period. We expect them to result in no significant change in earnings profile compared with that under previous drafts.
We continue to keep KEL under review due to uncertainty regarding the implementation of this MYT. KEL has the option to legally challenge this tariff within 15 days before its notification by the government or conclude stake sale to Shanghai Electric at lower price.

12/07/2018 6 EN

Underlying

K-Electric

K-Electric Limited is a Pakistan-based company engaged in the generation transmission and distribution of electric energy to industrial and other consumers. The Company covers an area of over 6,500 square kilometers and supplies electricity to all the industrial, commercial, agricultural and residential areas that come under its network. The Company provides electricity to customers in Karachi, Dhabeji and Gharo in the province of Sindh and Hub and Uthal, Vindhar and Bela in Baluchistan. It produces electricity from its own generation units with an installed capacity of 2,341 megawatts. The Company's transmission system comprises a total of approximately 1,249 kilometers of 220 kilovolts, 132 kilovolts and 66 kilovolts lines with over 60 grid stations and approximately 130 power transformers. Its power distribution is managed though distribution of the area into approximately four regions, which are divided into a total of approximately 30 distribution centers.

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PK0000501012 Pakistan Stock Exchange Pakistan

Provider

Elixir Securities

Elixir Securities Pakistan is a Corporate Member of the Pakistan Stock Exchange & Pakistan Mercantile Exchange and is one of the leading securities brokerage & investment banking firms in Pakistan, established since 1994. Our principal business activities include all aspects of Pakistan’s Capital Markets covering Securities Brokerage (Equities, Fixed Income and Commodities), Corporate Finance & Capital Markets Advisory (M&A, ECM, DCM) and Investment Research (Economics & Securities). We are one of the most active & aggressive Broker-Dealers in Pakistan executing trades for most of the Top 20 Global Brokers with unmatched corporate access credentials and have successfully advised and closed on some landmark ECM transactions in the history of Pakistan including the largest deal in frontier Asia (USD 1.02 billion). Our Clients include foreign and domestic financial institutions (Banks, Asset Managers, Insurance Companies, Pension Funds) corporates, HNWI’s and retail investors. This is supported by a very strong and independent research capability, which is quoted regularly in both local and international media.

Elixir Securities Pakistan is the proud recipient of many awards & recognitions including AsiaMoney’s Brokers Poll 2017, FinanceAsia’s Pakistan Best Investment Bank and Best Broker 2017, The Asset’s Best Brokerage House in Pakistan 2016, Asiamoney’s “Best Domestic Equity House 2015 in Pakistan”, The Asset Triple A Country Awards 2015 - Pakistan “Deal of the Year” and “Deal of the Year-Highly Commended”, CFA Society of Pakistan Awards for Year 2015 “Best Research Analyst (1^st Rank), CFA Society of Pakistan Awards for Year 2014 “Best Research Analyst (1^st Rank)”, “Best Trader” 2nd Runner-up (3rd Rank), The Asset Triple A Country Awards 2014’s “Best Deal in Pakistan” and Capital Finance International’s nomination for “Best Equity Research in Pakistan 2010”.

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Analysts

Sharoon Ahmad

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K-Electric Limited - Reconsidered MYT Largely Unchanged; Uncertainty Still Persists

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K-Electric Limited - Reconsidered MYT Largely Unchanged; Uncertainty Still Persists

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Pakistan Equity Market: Weekly Review - Index Closes Above 41k Mark on Foreign Buying

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