November 8, 2019 (MLN): The Hub Power Company Limited (HUBC), after experiencing a substantial growth of 86% in its net profits, held its analyst briefing on November 7, 2019, to discuss its 1QFY20 financial/operational performance, along with the future outlook.
To recall, the company announced its financial results on October 30, 2019, as per which its profitability increased to Rs. 5.8 billion in 1QFY20.
Speaking on the above-mentioned results, the management said that the company’s profitability was attributable to China Power Hub Generation Company (CPHGC) plant in Aug 2019 and 28%YoY PKR depreciation against the greenback.
The company observed a decline in revenue by 21%, owing to lower factor at Hub and Narowal. However, other operating and finance cost surged by 20x YoY and 2.3x YoY which kept the profitability in check.
According to a research note by Pearl Securities, the management of the company during the briefing apprised that gross profitability of the company exhibited rise of 54%YoY as a result of exchange rate indexation due to significant PKR devaluation.
Shedding some light on the company’s expansion stage, the management informed that the company is expecting to commence the mega projects; Thar Energy Ltd (TEL) and ThalNova Power Limited from Jun 2021 and Jan 2022 respectively. Moreover, SECMC has entered in Phase-1. The generation capacity of the company would increase to 3580MW after completion of these projects.
With regards to the PKR200bn Energy Sukuk-II, the delay execution of Sukuk-II has caused the circular debt to pile up. The management briefed that HUBC expects it to be issued by Dec’19 after the post review of IMF.
The company expects the first dividend from CPHGC by Jun’21 whereas the management informed that dividend from TEL & ThalNova can be expected after 12-18 months from their respective COD, reported Pearl securities.
It is prudent to mention that the company has to inject US$16mn and US$25mn in ThalNova and TEL respectively, which they are confident to arrange by Dec’20.
Providing Vision 2025, management would keep the balance between growth and value creation for shareholders, reported Foundation Securities. The company plans to focus on investment opportunities in Asia, Africa and North America.
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