HUBCO and KAPCO likely to post better results

pakistan-flagHeavyweights of the power sector HUBC & KAPCO are scheduled to announce their half yearly results next week. According to a report by Pakistan’s leading brokerage house, AKD Securities, HUBC to is expected post a consolidated NPAT of PkR4.57 billion (EPS: PkR4.33) for 1HFY15 as against a net profit of PkR3.46 billion (EPS: PkR2.88) for 1HFY14, up 50%YoY. The base plant is anticipated to contribute PkR2.3/share to the bottomline, an increase of 35%YoY largely due to the absence of major overhauls that dragged the bottom-line last year, with Laraib expected to contribute PkR0.75/share to the bottom-line, reflecting an increase of 1.2x over last year’s contribution of PkR0.34/share. That said, results for the 2QFY15 may be blemished due to an uncharacteristically low load factor of 52% during this period. This was due to furnace oil supply constraints imposed by PSO, and accumulation of systemic debt in the bottom of the power chain. Load factor for the entire period is buoyed by higher generation during 1QFY15, pushing the load factor for the period to 65%. Brokerage house expects results to be accompanied by an interim dividend of PkR4.25/share. The company’s payout profile should remain immune to planned hefty investment in 2 X 660MW coal fired Greenfield power plants which would enjoy a 27%+ ROE during construction.

KAPCO is expected to post consolidated NPAT of PkR3.67 billion (EPS: PkR4.18) for 1HFY15 as compared to net profit of PkR2.84 billion (EPS: PkR3.23) for 1HFY14 underpinning an increase of 29%YoY. Even as 2QFY15 load factor clocked in at 48% for the quarter (dragging the 1HFY15 load factor to 61%). As a result, 2QFY15 earnings may clock in at a subdued PkR1.44/share but this would still be higher by 13%YoY in the absence of major overhauling costs. Alongside the result, KAPCO is expected to announce an interim dividend of PkR3.25/share. In this regard, the final dividend for the year is likely to be higher as the company currently suffers from liquidity constraints with mounting payables to PSO, which is pushing up finance costs




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