Kot Addu Power Company Limited (KAPCO) announced its 2QFY21 financial result today where the company posted a Profit After Tax (PAT) of PKR 5,296mn (EPS: PKR 6.02), down by 21% YoY compared to PKR 6,694mn (EPS: PKR 7.60) during same period last year. This takes 1HFY21 profitability to PKR 11,498mn (EPS: PKR 13.06) down by 2% compared to PKR 11,727mn (EPS: PKR 13.32) during 1HFY20.

Result Highlights

· During 2QFY21, sales went up by 17% YoY to PKR 10.7bn due to higher dispatches (320 GWh; Load factor 11%). However, RLNG and FO prices remained low compared to same period last year. During 1HFY21, sales went down by 23% due to 13% YoY decline in dispatches to 1,991 GWh vs. 2,277 GWh during same period last year.

· Gross profit of the company increased by 14% YoY mainly due to 6.0% YoY PKR depreciation during 2QFY21.

· During 2QFY21, other income declined by 56% YoY to PKR 3.0bn given lower interest rates and lower overdue receivables, which were down by 4% YoY to PKR 107bn (as of Sep’20).

· The decline in interest rates and short term borrowings (-27% YoY to PKR 39.8bn as of Sep’20) translated to a dip in finance cost to PKR 735mn during 2QFY21 (-70% YoY).

Recommendation

· We have a “BUY” stance on KAPCO with a Dec’21 target price of PKR 66.4/share.

Courtesy – AHL Research