Hub Power earnings surge due to lower finance cost, PKR depreciation and profit from CPHGC

The management of HUBC held a corporate briefing session today to discuss the company’s performance post-release of FY21 results.

To recall, during FY21 the company posted a profit after tax (PAT) of PKR 33,688mn (EPS: PKR 25.97), up by 35% YoY compared to PKR 25,044mn (EPS: PKR 19.31) during same period last year. This rise in earnings is due to lower finance cost, PKR depreciation and higher share of profit from China Power Hub Generation Company (CPHGC). The company also announced a cash dividend of PKR 5.00/share taking full year payout to PKR 12.00/share.

Key Takeaways

Thar Energy Limited and ThalNova Power CoD is expected by Mar’22 and Jun’22, respectively. Local and foreign debt disbursement has started from Apr’21 which will speed up the construction.

The company has completed dependable capacity test of Hub plant.

Application for tariff true-up of CPHGC is in the final stages and is expected any time.

Recovery ratio of CPHGC is around ~70%, management disclosed.

Management also disclosed that the dividend from CPHGC is expected by Dec’21.

Higher tax expense during the year was mainly due to higher share of profit from CPHGC taking the effective tax rate to 13% for FY21.

Overdue receivables of Hub, Narowal, Laraib and CPHGC are PKR 70bn, PKR 18bn, PKR 6bn and PKR 50bn, respectively.

Coal conversion of the Hub plant is still under consideration and it will be based on Thar coal.

ECC has deferred the approval of payment of plants under 2002 policy due to NAB related issues. However, the management expects ECC to take a decision soon in this regard, as the Govt. is committed to honor the binding agreements.

Due to addition of Coal and RLNG plants, the load factor of Hub plant settled at 1.8% during FY21 (FY20: 0.3%). Load factors of Narowal, Laraib and CPHGC during FY21 remained 26%, 63% and 72%, respectively.

Courtesy – AHL Research

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