The Hub Power Company posts PAT of PKR 9,099mn 1QFY23

The Hub Power Company Limited (HUBC) announced its 1QFY23 financial result today where the company posted a profit after tax (PAT) of PKR 9,099mn (EPS: PKR 7.01), up by 23% YoY compared to PKR 7,417mn (EPS: PKR 5.72) during 1QFY22. The rise in earnings is majorly due to 35% YoY increase in share of profit form associates and joint venture and 90% rise in other income. However, finance cost increased by 41% to PKR 2,336mn.

Result Highlights                                                       

During 1QFY23 net sales witnessed an increase of 12% YoY to PKR 29,590mn due to higher furnace oil prices however, dispatches declined by 49% YoY to 455 GWh. On a QoQ basis, sales declined by 8% due to lower dispatches, down by 38% QoQ to 455 GWh. Hub base plant load factor settled at 8% (200 GWh), Narowal dispatched 208 GWh to the national grid translating the load factor to 45%, while Laraib’s load factor arrived at 26% (47 GWh).

During 1QFY23, gross margins of the company increased by 325bps YoY to 33%. The rise in margins is mainly attributable to lower load factor during 1QFY23, we view.

Other income increased by 90% YoY to PKR 412mn during 1QFY23 due to higher income from management services, we view.

The company recognized share of profit from associate and joint venture of PKR 3,091mn during 1QFY23 compared to PKR 2,293mn during 1QFY22. The rise in profits is attributable to 23% YoY PKR depreciation against the US Dollar.

Finance cost during 1QFY23 increased by 41% YoY to PKR 2,336 due to higher interest rates.

Recommendation                                                      

Currently we have BUY call on the scrip with Jun’23 target price of PKR 125.7/share.

Courtesy – AHL Research

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