PACRA assigns an initial rating of ‘AA+’ to HUBC's debt instrument

December 15, 2023 (MLN): Pakistan Credit Rating Agency Limited (PACRA) has assigned an initial entry rating of "AA+" for long-term and "A1+" for short-term to The Hub Power Company Limited (PSX: HUBC’s) debt instrument, latest press release issued by PACRA showed.

The debt instrument is worth Rs6 billion and the credit rating agency has assigned a stable outlook forecast to it.

The rating reflects the holding company character of HUBCO with an exclusive focus on the different dimensions of the energy sector.

HUBCO itself is a 1,292MW RFO-based power plant situated at Mouza Kund, Hub in Balochistan.

With its investments in Narowal Energy Limited, Laraib Energy Limited, China Power Hub Generation Company, Thar Energy Limited and Thal Nova Power Thar Ltd, the Group has an established footprint in the power generation sector. Hub Power Services Limited is a wholly owned subsidiary of HUBCO that provides Operation and Maintenance (O&M) services to its existing power plants.

In addition, the company also holds 49% stake in China Power Hub Operating Company (Pvt) Limited, a joint venture with China Power International Maintenance Engineering Company Limited, to provide O&M to the Super Critical Coal Power Plant at Hub.

The Company also holds a minority stake of 8% in Sindh Engro Coal Mining Company which is establishing a coal mining facility at Thar. P

rime International Oil and Gas Company (50% owned by Hub Power Holdings Ltd) has acquired all upstream operations and assets of ENI Pakistan under a J.V. with ENI’s local employees.

The company reported a topline of Rs9.847 billion during the first quarter of FY24 (FY23: Rs44.52bn).

During 1QFY24, there was no generation from the plant. Similarly, during FY23 the generation of the plant declined to 205GWh (FY22: 1,229GWh) due to the government's priority to obtain electricity from plants with lower generation costs.

The profitability of the company is further supplemented by dividends and Income from Management Services received from subsidiaries.
Although HUBCO has a sizeable amount of borrowings to support its working capital needs and growth opportunities.

The settlement of outstanding receivables (Sep 2023: Rs58.673bn) due from CPPA-G remains crucial.

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