Hub Power – a good going ahead.

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The management of HUBC held a corporate briefing session today to discuss the company’s performance post-release of 1HFY23 results.

To recall, during 1HFY23, HUBC posted a profit after tax (PAT) of PKR 22.4bn (EPS: PKR 17.27), up by 83% YoY compared to PKR 12.2bn (EPS: PKR 9.41) during 1HFY22. The rise in earnings is majorly due to a 15.7x YoY increase in the share of profit from associates and joint ventures and 89% rise in other income. However, finance costs also increased by 110% to PKR 7.1bn. During 2QFY23, the company posted a PAT of PKR 13.3bn (EPS: PKR 10.25) compared to PKR 4.8bn (EPS: PKR 3.70), up by 177% YoY and 46% QoQ. Along with the result, the company also announced a cash dividend of PKR 5.75/share, taking the period-end payout to PKR 21.25/share.

Key Takeaways

Thar Energy Ltd (TEL) and ThalNova (TN) Power achieved commercial operations date (CoD) on Oct 1st 2022 and Feb 16th 2023, respectively.

Since CoD, TEL has generated 690 GWh and remained 95% available during the period.

TEL is ranked in the top 5 of the merit order due to lower fuel cost.

HUBC holds 60% share of TEL with an investment of USD 79mn.

Since CoD, TN has generated 33 GWh and plant remained 99% available.

TN is also ranked in the top 5 of the merit order due to lower fuel costs.

HUBC holds a 38.3% share of TN with an investment of USD 52mn.

China Power Hub Generation Company (CPHGC) achieved Project Completion on Feb 23rd, 2023 under the terms of financing agreements.

The project completion of CPHGC has released HUBC for maintaining a Standby Letter of Credit (SBLC) amounting USD 150mn, subsequent to which CPGHC will be able to distribute dividends to its shareholders subject to the availability of liquidity.

HUBC holds a 47.5% (46.0% beneficial interest) share of CPHGC with an investment of USD 249mn.

CPHGC’s claim for property damage and business interruption has been accepted for a total amount of USD 65mn.

TEL and other Thar coal-based plants are facing the transmission issue which is expected to be addressed in 1-2 months.

Project completion of Singh Engro Coal Mining (SECMC) is expected during this year, subsequent to which HUBC is expected to receive a dividend from SECMC in 1HFY24.

The late payment surcharge on CPHGC’s overdue receivables is KIBOR+2%.

There is no active discussion on the early retirement of the Hub base plant.

Courtesy – AHL Research

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