·         We revisit our investment case on Hub Power Company Ltd (HUBC), which posted an eventful FY23, marked by the announcement of record dividends of PkR30/sh, yielding an average of 34.5% during the year

·         With both the issues pertaining to ‘Energy Revolving Fund’ account (tied to conditions by CPHGC sponsors) and final tariff determination by the power regulator resolved during the outgoing year, being prerequisites for cash payouts, we expect the affiliate company to begin with a modest payout of PkR5.0/sh during FY24.

·         With both indigenous coal based power plants coming online in FY23, they are expected to deliver cumulative ROE contributions of ~PkR9/10bn during FY24/25, respectively.

·         Overall, we have a ‘Buy’ call on HUBC with a June’24 Target Price of PkR155/sh, providing an upside of 45% over last close. Additionally, we estimate dividend yields for FY24/25 at 21%/30%, culminating to a total return of 67% from last close.

Courtesy – AKD Research