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EUR 8.14 For Business Accounts Only

Pakistan IPPs: While dispatches perk up, payouts look gloomy amid rising interest rates

  • The power generation during Mar’18 clocked in at 12,132MW, up 15%YoY/25%MoM. The generation from FO based sources clocked in 1,965MW, down 43%YoY, but improved 2.4xMoM. The FO based IPPs are expected to operate on a higher level, in the upcoming quarter, with their full year utilization levels expected to fall close to our expectation.
  • However, the rising interest rates scenario make D/Y of select IPPs unattractive. KAPCO offers a D/Y of 16.5% in FY18F (after a 10% haircut to full year DPS), 8ppt higher than the 10 year PIB rate, to compensate for the PPA expiry risk. We prefer HUBC (TP: PRs139/sh), which has 2x660MW and 330MW power projects expected to come online in FY21.
  • NPL and NCPL have so far skipped dividends in 9MFY18. Our calculations suggest a 100% receivables settlement will be needed for NCPL to make a potential payout of PRs4.45/sh. While, only a 50% receivables settlement could result in PRs5.81/sh payout from NPL.
Underlyings
Hub Power Co. Ltd.

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.

Kot Addu Power

Kot Addu Power Co Ltd. Kot Addu Power Company Limited is a Pakistan-based power generation company. The Company's principal activities are to own, operate and maintain a multi-fuel fired power station with approximately 15 generating units with a nameplate capacity of 1,600 megawatts (MW) in Kot Addu, District Muzaffargarh, Punjab, Pakistan. The Company also sells the electricity produced therefrom to a single customer, the Pakistan water and power development authority. The power plant is a multi-fuel gas-turbine power plant using three fuels to generate electricity: gas, light sulfur furnace oil and high speed diesel. The plant's combined cycle technology enables it to use the waste heat from the gas turbine exhaust to produce steam in the heat recovery steam generator, which in turn is used to run the steam turbines.

Nishat Chunian Power Ltd.

Nishat Chunian Power Ltd. Nishat Chunian Power Limited is a Pakistan-based power generation company. The principal activity of the Company includes building, owning, operating and maintaining a fuel fired power station having gross capacity of 200 megawatts and net capacity of 195.722 megawatts at Jamber Kalan, Tehsil Pattoki, District Kasur, Punjab, Pakistan. The Company's project is a 200 megawatts residual furnace oil (RFO) fired reciprocating engine technology combined cycle power plant. The primary components of the plant has approximately 11 engine sets of type 18V46 manufactured by WARTSILA Finland, and one heat recovery steam turbine and alternator sets manufactured by Converteam and ABB. The primary fuel of the plant is RFO. The Company is a subsidiary of Nishat (Chunian) Limited.

Nishat Power Ltd.

Nishat Power Limited is a Pakistan-based company, which as an independent power producer (IPP). The principal activity of the Company includes building, owning, operating and maintaining a fuel fired power plant based on Reciprocating Engine Technology having gross capacity of 200 megawatts in Jamber Kalan, Tehsil Pattoki, District Kasur, Punjab, Pakistan. The Company is a subsidiary of Nishat Mills Limited. The Company, through its subsidiary, Lalpir Solar Power (Private) Limited, is engaged in building, owning, operating, and maintaining or investing in a solar power project having gross capacity up to 20 megawatt peak (MWp) with net estimated generation capacity of approximately 19 MWp. Its project site is located at Mehmood Kot, Muzaffar Garh district.

Provider
Intermarket Securities Limited
Intermarket Securities Limited

​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.

Analysts
Ailia Naeem

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