Topline Flash Note: Hub Power Company (HUBC): Analyst Briefing Takeaways
- Thar Energy and ThalNova are expected to commence operations by Mar-2022 and Jun-2022, respectively. To highlight, Thar Energy and ThalNova have completed 56% and 30% of construction work, respectively.
- Availabilities for HUB plant, Narowal and Laraib were 88%, 86% and 100% respectively during 1QFY21 compared to 97%, 94% and 98% respectively in 1QFY20. To note, low availabilities for HUB and Narowal plant were due to scheduled maintenance.
- Load factors for HUB plant, Narowal and Laraib were 4%, 48% and 53% respectively during 1QFY21 compared to 1%, 42% and 29% respectively in 1QFY19.
- The availability and load factor for China Power Hub Generation Company (CPHGC) were 86% and 69%, respectively.
- The company is currently working on three new projects which includes (1) waste water desalination plant at a cost of ~Rs20-25bn, (2) a RO plant and (3) conversion of HUBC base plant to a water treatment plant.
- Regarding the MOUs, implementation committee has been formed, led by the Advisor to Prime Minister on Finance and Revenue.
- As per the management, the committee is evaluating different instruments to raise funds to settle the overdue receivables of the IPPs.
- Overdue receivables of three plants (HUB, Narowal and Laraib) are Rs45bn, while overdue payments are Rs31bn.
- CPHGC and Sindh Engro Coal Mining Company (SECMC) are expected to start paying dividends from 1H2021.
- The factors that the board considered while announcing dividend were (1) improvement in cash collection, (2) financial close of Thar projects and (3) expectation of payments from recently signed MoUs.
Going forward, dividend payments will depend on liquidity and cash flows requirements of the company.
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.
Topline Securities is one of the fastest-growing brokerage houses in Pakistan. It has strong Equity Brokerage, Economic/ Equity Research, Commodity Trading and Corporate Finance & Advisory functions.
Topline Securities has been endowed with numerous awards by renowned international financial organizations. The highlights of which consists of the award for ‘Best Local Brokerage House of Pakistan’ by Asiamoney Brokers Poll (the largest Asia-focused equity services provider poll) in 2016 and ‘Best Equity Brokerage House’ by CFA Society Pakistan in 2015.
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