StockSmart Weekly Review Weak sentiment from last week coupled with geopolitical tensions in the region and uncertainty over talks with IMF continued to derail investor confidence during the week apart from Thursday’s session which saw massive buying from Mutual Funds in tune of US$12.7mn, helping the benchmark index to break the losing streak. The index, however, could not sustain that level and closed in red in the following session by ...
A director at Kot Addu Power Co Limited sold 500,000 shares at 41.920PKR and the significance rating of the trade was 68/100. Is that information sufficient for you to make an investment decision? This report gives details of those trades and adds context and analysis to them such that you can judge whether these trading decisions are ones worth following. Included in the report is a detailed share price chart which plots discretionary trades by all the company's directors over the last two ye...
AKD Research - Off the Analyst's Desk Feb 01, 2021 KAPCO: Master agreement initialed; LD to be settled over 16 months Master agreement initialed: As per company announcement on PSX, the Kot Addu Power Company Ltd (KAPCO) has initialed Master agreement and an amendment to power purchase agreement in furtherance to MoU signed in Aug'20. Key features include: · Existing capacity payments and variable O&M shall be reduced by 11% · USD exchange rat...
StockSmart Weekly Review The outgoing week marks as the 5th consecutive week, where KSE-100 closed in green. The market maintained its bullish momentum in the first three trading sessions, however witnessed consolidation in the latter part of the week, closing at 37,608pts, up 0.74% WoW. Market rumors on fines on cement companies as well as profit taking dragged the cement sector under pressure in last two trading sessions. Major news dur...
As per channel checks, the Government of Pakistan has chalked out the disbursement plan for cPKR200.9bn worth of proceeds from the Energy Sukuk II. This Sukuk issue is government guaranteed, has a 10yr tenure with bi-annual profit payments (at 6M KIBOR minus 10bps), and will be subsequently listed on the PSX. This follows the first Sukuk issued in March 2019 (also PKR200bn size). The bulk of the disbursement (c59%) will be made to hydel plants, WAPDA and coal-fired IPPs. Note that many of the...
Pakistan Energy: An uneven recovery for cracks post COVID-19 POL product cracks moved erratically during May’20, aided by limited upsides priced into the demand scenario and underlying crude benchmarks recovering (May’20/FY20TD Arab light Average of US$26.3/54.1/bbl), as May’20 HSD/MS crack to Arab Light for the month averaged US$+1.9/-1.7/bbl standing below FY20TD average of US$+8.3/+US$1.1/bbl, where HSD cracks slipped drastically (-74%MoM) during the month HSFO cracks retraced back to 3QC...
StockSmart Weekly Review Following global equities, KSE-100 index drained 5.6%WoW to close at 37,984pts as foreigners trimmed their positions (net sell: US$22.5mn) preferring safer assets amidst impact of spread of Coronavirus outside China on global growth outlook. Mutual funds followed suit with a net sell of US$11.6mn. The selling was absorbed by Insurance (Net Buy: US$25.3mn) and Banks/DFIs (Net Buy: US$7.8mn). Average volumes also im...
We revisit our investment case on Kot Addu Power Company (KAPCO) with a TP of PkR31.2/sh, implying a Sell stance on last close. We incorporate a ‘Take and Pay’ agreement for KAPCO beyond its PPA expiry (FY21) till FY30, given plant’s remaining life expected at 10-15 years. We believe that the ‘Escalable’ component of the tariff shall continue in its existing form—however, it will be linked to the utilization level (28% assumption incorporated), as opposed to plant availability (91% in FY19) ...
Oct’19 rounds out the culmination of a watershed mark for international refining margins, with MS/HSD/HSFO crack to Arab Light for the month averaging US$+3.90/+11.39/-18.82/bbl below vs. 1QFY20 averages +3.2/+11.5/-6.5/bbl where HSFO shows a clear break downward as IMO 2020 rules and slowing demand from marine bunkering worsen cracks FY20TD average cracks of light distillates HSD/MS averaging at US$+11.5/+3.5/bbl firming their spreads (vs. 4QFY19 average of +8.9/+1.7/bbl) and HSFO cracks wor...
Kot Addu Power Company (KAPCO) posted 4QFY19 NPAT of PKR648mn (EPS: PKR0.74), down 84%yoy, taking FY19 NPAT to PKR13,112mn (PKR14.90) up 23%yoy. Results were accompanied with surprise final cash dividend of PKR3.0/sh, taking full-year payout to PKR4.50/sh (30% payout). This is a weak result by KAPCO due to reversal charge on true-up income of PKR278mn (vs. PKR4,500mn quarterly run-rate in FY19), however, this is masked by high payouts.
Furnace oil based generation has drastically declined (61% YoY in 11MFY19) as 8,600MW, 60% of pre-expansion capacity, was added to the system over FY17-19. HUBC base plant, Nishat IPPs and Narowal witnessed 30-45 ppt YoY lower dispatch factors during 11MFY19, with HUBC base plant being the worst affected. Considering minimal utilization levels, and long brewing capacity trap - capacity payments are likely to increase 57% YoY to PKR1,000bn (2% of GDP) in FY20F – USD hedged returns to FO based...
NEPRA in its decision dated 14th June, promulgated domestic consumer tariff hike across 10 DISCOs by a uniform rate of PkR1.494/KwH till Dec'19 with the aim of recovering an additional PkR189.64bn over an extended period of fifteen months From the DISCO-wide consultative process, a demarcation of costs to be recovered pinpoints ~82% of arrears arising from Capacity Purchase Price, i.e. variations in core operating expenses, disbursed to IPPs for interest payments, ROE and indexed to US$, KIBO...
• Power generation dropped 13% yoy to 7,621GWh (11,341MW) in March, where both RFO and LNG-based generation dropped 97% and 16% yoy, respectively. Coal-based IPPs also witnessed a drop (down by 15% yoy), compensated by Hydel (up by 84% yoy). The broad-based decline is due to lower demand by NTDC. This trend will reverse to a large extent during peak summer, in our view.
The IMS Power Universe is expected to post 2QFY19F NPAT of PKR7.5bn, up 11% yoy, but down 5% qoq. The increase in earnings from last year is attributable to 21% yoy weaker PKR, which will more than offset lower O&M savings (drop in dispatch factors ranging from 30-60ppt yoy). We expect payouts to remain inconsistent across the sector, with KAPCO expected to pay a first interim cash dividend of PKR4.5/sh vs PKR4.3/sh in 1HFY18. HUBC has recently reverted to its half yearly payout pattern, and ...
The IMS IPP Universe is set to witness 17/4% yoy/qoq higher earnings of PKR7.37bn in 1QFY19f amid multiple positives, most prominent being: (i) 18/6% yoy/qoq PKR depreciation, and (ii) higher penal income driven by circular debt build-up and higher interest rates.
HUBC, KAPCO and NPL are set to announce their 1QFY19 results next week where we expect them to post EPS of PKR2.4, PKR2.7 and PKR2.5, respectively. Earnings are expected to grow on YoY basis on the back of 18%YoY average PKR/USD depreciation and higher penal income. Incorporating a higher risk free rate of 11% (vs. 10% earlier) and a higher expected average PKR/USD of PKR135 in FY19 take our Jun-19 PT’s for HUBC, KAPCO and NPL to PKR140, PKR55 and PKR33, offering 68%, 15% and 37% capital upsi...
Power generation during Aug’18 clocked in at 1,600MW, up 10% yoy. However, the Furnace Oil (FO) based generation declined by 47% yoy to 187MW. The share of FO based generation in total energy mix has halved to 12% from 24% in Aug’17.
Kot Addu Power Company posted 4QFY18 NPAT of PKR4.0bn (EPS: PKR4.56), up 49%yoy/82%qoq. The result was above our expectation of PKR2.25bn (EPS: PKR2.56) wholly explained by higher-than-expected other income recorded at PKR6.3bn vs. our expectation of PKR3.8bn (net EPS impact: PKR1.98). This takes the full year FY18 earnings to PKR10.6bn (EPS: PKR12.06), up 12% yoy.
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