January 5, 2021 (MLN): As the government is planning to repay overdue circular debt receivables of Rs 450 billion in three phases, this development will not only ease off the liquidity position of the cash strapped Independent Power Producers (IPPs) but will result in dividend payouts to shareholders.
Arif Habib Limited in its report identified Nishat Mills Limited (NML) and Nishat Chunian Limited (NCL), the major indirect beneficiaries post-resolution of the overdue receivables of IPPs.
As per the report, NML owns significant shareholding in three IPPs namely; Nishat Power Limited (51%), Pakgen Power Limited (27.6%), and Lalpir Power Limited (28.8%). To note, the net receivables per share of these IPPs stand at Rs 13.2 billion, Rs 12.19 billion, and Rs 6.89 billion, translating into the net per share of Rs 37.32, Rs 32.78, and Rs 18.14 respectively.
If these IPPs receive the entire outstanding amount, it might result in dividend income for NML, the report cited.
The report further estimated the impact of payouts on NML’s earnings by stating that if 100% payout is assumed, this will increase NML’s earnings by Rs 31.79 per share, while, 75% and 50% payout will aid profitability by Rs 23.85 per share and Rs 15.9 per share respectively. Whereas, 25% of payout will cushion the bottom-line by Rs 7.95 per share.
Similarly, Nishat Chunain Limited (NCL) has a significant holding in Nishat Chunian Power Limited (NCPL) whose net receivable position per share stands at Rs 9.489 billion, translating into a net per share of Rs 25.83.
Going by the report, at 100% dividend payout, the earnings of NCL will go up by Rs 18.64 per share. 75% and 50% dividend payout will augment NCL’s earnings by Rs 13.98 per share and Rs 9.32 per share respectively, whereas, 25% payout will expand earnings per share by Rs 4.66.
