The Hub Power Company Ltd (HUBC) announced its financial results for 1HFY25 today, reporting a profit of PKR 23.3bn (EPS: PKR 17.99), down by 28% YoY, compared to PKR 32.4bn (EPS: PKR 24.95) in SPLY. In 2QFY25, the company posted earnings of PKR 4.2bn (EPS: PKR 3.25), reflecting a 72% YoY decrease and a 78% QoQ drop. HUBC declared a cash dividend of PKR 5.00/share, along with the results.

Result Highlights

•        In 1HFY25, the company reported sales of PKR 47.5bn, reflecting a 25% YoY decline, largely due to the termination of the PPA for the Hub base plant. In 2QFY25, sales also saw a significant drop, falling by 48% YoY and 52% QoQ, primarily driven by the same factor.

•        The company incurred a distribution expense of PKR 496mn in 1HFY25, compared to no such expense in the previous year.

•        Other expenses of PKR 3.6bn were recorded in 2QFY25, marking a 22x increase compared to the previous year. In our view, this increase is attributed to the provision for LPS disallowance related to the Narowal plant.

•        The share of profit from associates declined by 11% YoY, amounting to PKR 20.2bn in 1HFY25. In our view, this decline is mainly due to lower income from Prime International.

•        Finance costs decreased by 32% YoY to PKR 9.6bn in 1HFY25, largely due to a reduction in interest rates. In 2QFY25, finance costs also saw a decline of 41% YoY and 25% QoQ due to the same reasons.

•        The company reported an effective tax rate of 38.7% in 2QFY25, up from 15.7% 2QFY24. Further clarification is required regarding the higher effective tax rate.

Courtesy – AHL Research