AHL Research has published an earnings preview for the power generation and distribution sector for the second quarter of FY26.

HUBC: The bottom line is projected to decrease by 3% quarter-on-quarter to PKR 8.7 per share in 2QFY26. The Hub Power Company Limited (HUBC) is set to announce its 2QFY26 results soon, and it is anticipated to report a Profit After Tax (PAT) of PKR 11,241 million, reflecting a 53.0% year-on-year increase.

This year-on-year growth in earnings is attributed to various factors: a 13.0% increase in gross profit, an 8.1% rise in contributions from associates’ profits, and a significant 51.9% year-on-year decrease in finance costs. Additionally, earnings were further bolstered by lower other operating expenses, especially since PKR 2.6 billion was provisioned for NEL in the same period last year.

We expect a dividend payout of PKR 3.00 per share for 2QFY26. In September 2025, CPHGC declared a total dividend of PKR 58.0 billion (adjusted to PKR 26.7 billion for HUBC’s stake), of which PKR 8.1 billion (or PKR 6.25 per share) was directed to HUBC through HPHL to fund past dividends. The remaining dividend is likely to be invested in the BYD project, suggesting limited near-term capital expenditures.

Although TEL and TNPTL achieved Commercial Production Date (PCD) as of October 31, 2025, no dividend income has been assumed from these sources. However, HUBC’s strong cash reserves could support payouts above the Return on Equity (ROE), thus ensuring future dividends.

The BYD project involves a capital expenditure of USD 150 million (approximately PKR 42 billion), with HUBC holding a 50% stake amounting to about USD 30 million (around PKR 8.5 billion). Of this, PKR 3 billion was already committed by September 2025. BYD has launched two models, Atto 2 and Sealion 7, priced at PKR 7.29 million and PKR 15.49 million, respectively, which bode well for HUBC.

In 2QFY26, the utilisation of the NEL plant remained low at 2% (compared to 0% in 2QFY25), while CPHGC recorded a utilisation rate of 1%. TEL and TNPTL operated at 60% and 49% utilization, respectively. LEL’s utilisation declined to 55% in 2QFY26, down from 70% in the previous year, likely due to decreased hydel flows. declined to 55% in 2QFY26 from 70% last year, likely due to lower hydel flows.