The Hub Power Company Limited (HUBC) announced its 4QFY21 financial result today where the company posted a profit after tax (PAT) of PKR 8,770mn (EPS: PKR 6.76), up by 29% YoY compared to PKR 6,791mn (EPS: PKR 5.24) during 4QFY20. This takes FY21 PAT to PKR 33,688mn (EPS: PKR 25.97) compared with PAT of PKR 25,044mn (EPS: PKR 19.31) during same period last year. The rise in earnings is majorly due to 34% YoY decline in finance cost during 4QFY21. Along with the result, company also announced a cash dividend of PKR 5.00/share taking full year payout to PKR 12.00/share.

Result Highlights

· During 4QFY21, net sales witnessed an increase of 34% YoY to PKR 15.8bn due to a 101% YoY increase in dispatches to 367 GWh (Hub Plant: 76GWh, 3% Load Factor, Narowal Plant: 147GWh, 31% Load Factor; Laraib: 144GWh, 78% Load Factor). During FY21, sales increased by 13% YoY due to a 39% YoY uptick in dispatches.

· During 4QFY21, gross margins of the company decreased by 16pps YoY to 56%. The decline in margins is mainly attributable to 9% YoY PKR appreciation and higher load factor during the quarter under review.

· During 4QFY21, the company recognized share of profit from CPHGC of PKR 3,818mn, down by 19% YoY mainly due to 9% YoY PKR appreciation.

· Finance costs decreased by 34% YoY to PKR 1,682mn in 4QFY21. The decline in finance costs was on the back of lower interest rates.

Outlook and Recommendation

· Currently we have BUY call on the scrip with Dec’21 target price of PKR 149.6/share.

Courtesy – AHL Research