February 21, 2022 (MLN): Phase I of Engro Energy’s hybrid renewable energy park project will be the development of 400MW (240MW wind and 160MW solar) is expected to increase the share of renewable energy to 30% by CY30 and create import substitution of Rs13 billion annually, the management of Engro informed during its corporate briefing session.
For Pakistan’s first hybrid renewable park, the company has signed the Memorandum of Understanding (MoU) with Sindh Transmission & Dispatch Company (STDC) and the Directorate of Alternative Energy.
For Thar coal mine, phase II and III expansion projects are expected to increase the mining capacity to 12.2mn MT (Phase I capacity of 3.8mn MT), briefing takeaways covered by AKD Securities noted.
The group is currently focusing on upcoming projects – a few of them in the execution phase while some of them are still under the planning stage.
Engro Enfrashare expects the addition of 1,000 new towers each year with a target to reach 5,000 towers. The Petrochemical project (PDH/PP) for which EOIs have been received from potential EPC contractors.
The project is currently in FEED mode for which the final investment decision will be taken by Dec’22. Once the green light is received, the facility is expected to come online by CY26.
The management informed that Engro Enfrashare deployed 79% of total new B2S sites built which led to an increase of 3xYoY in revenue. As of CY21, the company has 2,246 operational sites (+178%YoY) and 2,481 tenants, achieving a tenancy ratio of 1.1x.
In the power division, EPTL achieved 83% availability with 80% load factor, dispatching 4,225GWh. Similarly, EPQL’s revenue increased by 26%YoY on account of higher dispatch and load factor, being offset by the absence of a long term debt servicing component.
In the terminal business, Engro Elengy handled 72 vessels while Engro Vopak handled 1.28mn MT (+12%YoY) of chemicals.
Apprising investors regarding the financial performance, the management noted that the company has reported a 19.3% YoY increase in its net profits to Rs52.6bn in 2021.
This increase in ENGRO’s profitability is primarily attributable to higher reported profitability by the Fertilizers and Petrochemicals businesses.
On the fertilizer business front, EFERT’s net profit (the largest contributor to ENGRO’s earnings) witnessed an increase in its profitability by 16.32% YoY to clock in at Rs21 billion (EPS: Rs15.80) during CY21 on the back of a 12% increase in Urea offtakes and a 6% increase in its offtakes of overall product mix.
Furthermore, the bottom-line of Engro Polymer & Chemicals Limited (EPCL) settled at Rs15.1billion (EPS Rs16.28), depicting an increase of 2.6x YoY when compared to Rs5.73bn (EPS Rs6.3) in CY20, mainly on the back of higher PVC prices coupled with higher volumetric sales.
On the food business front, FrieslandCampina Engro Pakistan Limited (FCEPL)’s profits were also up by 10xYoY to Rs1.8bn in CY21 due to strong volumetric growth in all categories, improved gross margins and lower finance costs.
However, Engro Powergen Qadirpur Limited (EPQL) posted a profit after tax of Rs1.59 billion (EPS: Rs4.92) during CY21, depicting a decline of 23% YoY against the net profit of Rs2.08bn due to lower gross margins.
The management further stated that the GIDC re-measurement provision of Rs1bn has been booked while the recently approved WACOG bill is a move in the right direction however cost impact estimation is still underway.
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