Intermarket Intel - NCPL 2QFY18 Result Review: No payout in 1HFY18
- Nishat Chunian Power Ltd (NCPL) announced 2QFY18 NPAT of PRs849mn (EPS: PRs2.31), up 32% YoY but down 5% QoQ. This takes the 1HFY18 earnings to PRs1.74bn (EPS: PRs4.75), up 26% YoY. The results were slightly above expectation. NCPL skipped dividend as per our expectation similar to 1QFY18. This is in contrast to PRs1.50/sh interim cash dividend paid in 1HFY17.
- The sequential decline in earnings is attributable to a dip in dispatch factor which was 60% as opposed to 87% in the previous quarter amid temporary shutdown in Nov'18. The topline, thus declined by 19% QoQ. However, gross profits remained flattish, as higher fuel savings (average oil price up 13% QoQ) would have muted potential decline in O&M savings.
- On a YoY basis, the increase in earnings is attributable to higher fuel savings, courtesy 42% YoY higher oil price which again offset lower utilization levels.
- We expect the payouts of NCPL to remain constrained going forward as new power capacities may keep dispatches low. Meanwhile, the short term borrowing of NCPL has already reached pre-circular debt settlement levels at PRs 6.6bn in 1QFY18 amid rising oil prices.
- We maintain our Sell stance on NCPL at a TP of PRs29.2/sh.
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.
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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