Kot Addu Power Company Limited (KAPCO) is scheduled to announce its 4QFY21 financial result on Aug 17th 2021. The company is expected to post a profit after tax of PKR 4.8bn (EPS: PKR 5.43) during 4QFY21, down by 18% YoY. However, the dispute of outstanding liquidity damages between the company and Central Power Purchasing Agency has been resolved. Hence, the PPA of the company has been extended for 485 days with effect from Jun 27, 2021.

Resultantly, the company is expected to book provision of Liquidity damages of ~PKR 19.8bn (after tax). If the company books provision of LDs, the full year earnings are expected to clock in at PKR 1.02/share (4QFY21: PKR -17.1/share). Lower other income (-50% YoY) and PKR appreciation (9% YoY) are the primary reasons behind the decline in earnings.

Sales are expected to increase by 45% YoY to PKR 15.1bn during 4QFY21 due to higher (+43% YoY: 1,221 GWh) dispatches along with higher FO and RLNG prices. Other income is expected to decline by 50% YoY to PKR 2.1bn due to lower interest rates. Finance cost is also expected to decrease by 52% YoY on the back of lower interest rates and lower short term borrowings [down by 24% YoY to PKR 38bn (as of Mar’21)]. 

Courtesy – AHL Research