• The Hub Power Company Ltd (HUBC) has released its financial results for 9MFY25, posting a net profit of PKR 34.2bn (EPS: PKR 26.40), reflecting a 31% YoY decline. This drop is primarily attributed to the termination of the PPA for the Hub base plant. In 3QFY25, profitability also decreased by 36% YoY to PKR 8.50/share due to the same reason. However, on a QoQ basis, earnings surged by 162%, driven by a one-off provision of PKR 2.6bn in 2QFY25 related to a trade debt write-off at the Narowal plant.
• Sales during 9MFY25 declined by 32% YoY, again largely due to the Hub plant PPA termination. In 3QFY25, sales dropped 46% YoY for the same reason.
• Other expenses rose sharply to PKR 3.6bn in 9MFY25, 10x increase compared to the same period last year, mainly due to the provision of PKR 2.6bn related to a trade debt write-off at the Narowal plant.
• The company’s share of profit from associates fell 13% YoY to PKR 30.4bn in 9MFY25, mainly due to reduced earnings from Prime International, we view. In 3QFY25, this profit also declined by 16% YoY.
• On a positive note, finance costs dropped by 40% YoY to PKR 12.5bn in 9MFY25, primarily due to a decline in interest rates. In 3QFY25, finance costs fell 56% YoY and 29% QoQ, helped by a reduction in short-term borrowings.
• HUBC reported an effective tax rate of 20.1% in 3QFY25, compared to 16.3% in the same period last year.
• We maintain a BUY stance on HUBC, with a target price of PKR 162.7/share by the end of De’25. The stock is currently trading at an attractive forward price-to-earnings (P/E) ratio of 3.6x for FY26E.

 Courtesy – AHL Research