HUBC: Price performance expected closer to expansion CoDs; Buy
- We have revised our CoD assumption for the 330MW local fired power plant, delaying it to FY22F from FY21F earlier. The 330MW and 1,320MW coal fired power plants are expected to cumulatively add PRs4.0/sh to HUBC’s bottomline post CoD.
- We highlight that HUBC outperformed the market by 15% on average 12M before commissioning of its 215MW Narowal and 84MW Laraib Power plants, which cumulatively added PRs1.14/sh post CoD. The 1,320MW is expected to come online in Aug’19, which may trigger price performance of the scrip.
- With HUBC’s existing capacity to double in FY21F, post commencement of 1,320MW plant, the earnings are expected to post a 3yr CAGR of 24%. The scrip has shed 25% in 12M, making the LDCP a good entry point, in our view. We have a Buy stance on the scrip at our rolled forward TP of PRs145/sh (Upside: 45% on LDCP).
Hub Power Company is a holding company. Through its subsidiaries, Co. is engaged as a power producer in Pakistan that focuses on developing, owning, operating and maintaining power stations. Co. supplies electricity to Water and Power Development Authority and National Transmission and Despatch Company under long term Power Purchase Agreements for its Hub and Narowal plants respectively.
Intermarket Securities Limited (IMS) is a full service corporate brokerage firm based in Karachi, Pakistan. We service both domestic and international clients. IMS was ranked #2 Best Local Brokerage and #3 Best for Overall Country Research for 2016 by AsiaMoney.
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