· Hum Network Limited (HUMNL) announced its 1HFY22 results, reporting an earnings of PkR666.1mn (EPS: PkR0.70) compared to PkR691.8mn (EPS: PkR0.73) in the same period last year. Adjusting for PkR476.8mn gain on disposal of non-current assets recorded in the previous year (EPS impact: PkR0.5), earnings are +3.1xYoY.

· On a quarterly basis, earnings are +65.8%QoQ/95.7%YoY to PkR0.43/sh where sequential earnings growth is attributable to absence on PkR32mn charge in the current quarter.

· The company continues to produce phenomenal core results with revenue growing 24.8%QoQ to PkR1.5bn in 2QFY22 while GMs stood at 47.0% – though a notch lower than 1QCY21 of 50.2%. Yet, GMs have far exceeded levels reported in the same period last year where GM stood at 42.7%. The primary reason behind this feat is strong growth in company’s subscription income.

· The premier content of HUMNL has earned itself a far greater reach on digital platforms with only on YouTube its subscriber base stands at 18.5mn with additions in last one month clocking in at 0.8mn. It is the 3rd largest channel from Pakistan with views on uploaded videos extending to 677.6mn in past 30 days resulting in min. earnings potential of US$0.6mn (assuming US$1 per 1000 views).

· Additional impetus to earnings could come from upward revision in advertisement fees on Govt. ads to 140K from 100K previously, and strong corporate profitability pushing up marketing budgets.

· As a result of another strong quarter, the stock is +2.3% in the day. The stock is currently trading at a P/E of 5.1x. To highlight, the sponsors have offered to purchase up to 332.1mn shares (46.8% of free float shares) at a price of PkR7.0/sh with last date of offer being Feb 20’22.

Courtesy – AKD Research