Intermarket Pulse: HUBC: Govt approves second 660MW plant; Neutral
​The govt has allowed HUBC to setup 1320MW (2x660MW) imported coal fired power plants at Hub, which removes a major overhang over HUBC’s growth prospects. We maintain our estimates, as we had retained the second plant in our valuations on optimism that the company will be able to convince the govt. We rate it as Neutral.
Private Power and Infrastructure Board (PPIB) has issued Letter of Support (LOS) to Thar Energy Ltd for developing a 330MW mine mouth power plant at Thar. The project will add PkR11-12/sh to HUBC’s valuation. We await final tariff determination before incorporating it in our valuation.
HUBC offers a D/Y of 10%, where, apart from 330MW project, we flag further upside may arise if management enhances its equity share in CPHGL from 26% to 49%, as it reaches commissioning of Unit I, which would add another PkR12/sh to HUBC’s target price and increase it to PkR132/sh.
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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