The Hub Power Company (HUBC) has posted 3QFY19 consolidated profit after tax of Rs3.2 billion (EPS: Rs2.73), up 5% YoY, taking the 9MFY19 earnings to Rs8.6 billion (EPS: Rs7.40).
The earnings were above expectation for the quarter, due to diversion on gross profit basis. It is believed the Company has booked lower penal expense, as overdue payables declined by Rs15 billion QoQ.
Other headline items were broadly in-line. Key highlights of the 3QFY19 result included: 1) a 31% YoY decline in topline due to lower dispatch factors, 2) a 25% YoY higher admin cost as 1,320MW nears CoD and 3) a 83% YoY higher finance cost due to debt drawdowns for CAPEX amid rising interest rate environment.
For 9MFY19, the consolidated net profit increased 3% YoY, weaker Pak rupee led to increase on gross profits level, which cushioned the decline in bottom line due to 52% YoY higher finance cost.
As expected, HUBC did not announce any interim dividend along with 3QFY19 result. To recall, HUBC has not paid dividends during 9MFY19, as against 65% payout in 9MFY18. Analysts even see low probability of any payouts in 4QFY19 as well. Analysts maintain Buy stance on HUBC, where its 1,320MW coal powered plant is expected to commence operations in 1QFY20. The coal power projects are expected to lead to 30% CAGR in HUBC’s bottom line over FY19-21.