Kot Addu Power Company (KAPCO) announced its FY22 financial result today where the company posted a profit after tax (PAT) of PKR 9.9bn (EPS: PKR 11.24), down by 3% YoY compared to PKR 10.2bn (EPS: PKR 11.62) during same period last year. Decline in earnings is witnessed due a 5% decline in other income and imposition of super tax. During 4QFY22, company posted a PAT of PKR 1.7bn (EPS: PKR 1.89). The company also announced a cash dividend of PKR 4.0/share taking full year payout to PKR 8.0/share.

Result Highlights

· During FY22 net sales witnessed an increase of 171% YoY to PKR 136.6bn due to a 40% YoY increase in dispatches to 4,968 GWh along with higher RLNG and furnace oil prices. During 4QFY22, sales increased by 12.6x YoY to PKR 59.5bn due to capacity purchase price (CPP) adjustment of PKR 19.3bn during 4QFY21 and higher RLNG and furnace oil prices.

· During FY22, gross margins of the company decreased by 4pps YoY to 6%. The decline in margins is mainly attributable to higher load factor during the year. During 4QFY22, gross margins stood at 5% due to the higher load factor, we view.

· Other income decreased by 5% YoY to PKR 12.6bn during FY22 due to lower levels of overdue receivables. During 4QFY22, other income increased by 34% QoQ to PKR 3.4bn on the back of higher interest rates.

· During FY22, finance cost of the company increased by 41% YoY to PKR 4.4bn. Subsequently, finance costs clocked-in at PKR 1.8bn during 4QFY22, up by 81% QoQ on the back of higher short term borrowings in addition to higher interest rates.

· Effective tax rate during 4QFY22 settled at 62% compared to 24% during 3QFY22, given the imposition of a super tax through Finance Act, 2022.

Courtesy – AHL Research