Hub Power Company future looks promising

Hub Power Company (HUBC) held its corporate briefing today to discuss FY22 financial result and future outlook.

Thar Energy Limited (TEL) achieved synchronization with national grid on Aug 03, 2022. The work on project is 99% completed and COD is expected in Sep-2022.

ThalNova Power Thar (TNPTL) also achieved back energization with national grid. The work on project is 85% completed and COD is expected by end of Dec-2022.

Construction of Sindh Engro Coal Mining Company (SECMC) Phase-ll is underway and COD is expected in Sep-2022.

Hub Power Holding Company in a 50:50 joint venture with ENI’s local employees acquired all upstream operations and renewable energy assets owned by ENI in Pakistan. HUBC has received No Objection Certificate (NOC) from FBR and approval from Competition Commission of Pakistan (CPP). However, regulatory approval for transfer of ownership is expected to be complete by 4Q2022.

China Power Hub Generation Company (CPHGC) unit 1 returned to service on Jan 06, 2022. The insurance company agreed on the claim and has disbursed an advance amount of US$27mn while remaining amount is expected to be disburse in next few months.

The management be informed that CPHGC is also using Afghan Coal for power generation.

As per the management, Government’s decision to increase base tariff in phase manner will resolve pileup of circular debt at large extent.

As per the amended Finance Bill FY23, HUBC’s base plant is no longer subject to corporate tax after completion of 25 years.

The tax rate on dividend for CPHGC, TEL, and TNPTL is 25%. However, the company is in discussion with the authorities to bring it down to 7.5%.

The overdue receivables of HUB base plant, Narowal, Laraib and CPHGC are Rs50.7bn, Rs10.7bn, Rs5.3bn and Rs69.7bn respectively as of August 26, 2022.

Availabilities for HUB plant, Narowal, Laraib and CPHGC were 91%, 87%, 98%, and 71%, respectively during FY22 vs. 91%, 92%, 98% and 91%, respectively in FY21.

Load factors for HUB plant, Narowal, Laraib and CPHGC were 12%, 46%, 57% and 62%, respectively during FY22 vs. 2%, 26%, 63%, and 72%, respectively in FY21.

HUBC announced 4QFY22 consolidated earnings of Rs5.41/share, down 20% YoY and 24% QoQ. This took full year FY22 earnings to Rs21.95/share, down 15% YoY.

Along with the result, company did not announce any cash dividend considering fuel prices and lender obligations. Future announcement of dividend will be at discretion of board.

Courtesy – Topline Securities

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