AKD Quotidian about — HUBC 1HFY12 Result Preview

Karachi: Hub Power (HUBC) is scheduled to announce its 1HFY12 results tomorrow, Feb 8’12.

According to AKD Securities, on an unconsolidated basis, AKD Securities expects the company’s earnings to remain flat in 1HFY12, clocking in at PkR2.8bn (EPS: PkR2.45). In 2QFY12 alone, AKD Securities expects earnings to stand at PkR1.59bn (EPS: PkR1.38) – an increase of 29%QoQ. The sequential uptick in earning comes on the back of i) spread over circular debt, ii) higher pass through costs and iii) sequentially higher CPP payments. AKD Securities’ estimates are based on 1HFY12 sales of 3,737GWH (2Q:1,725GWH) of electricity to WAPDA from the Hub plant and 730GWH (2Q: 365GWH) from the Narowal plant. The company is also likely to receive production bonus on its higher load factor. With final determination of Narowal’s tariff still lingering, AKD Securities has used the reference tariff as determined in May’08 adjusted for the exchange rate and inflation. Along with the result, HUBC is expected to pay an interim cash dividend between PkR2.4-PkR2.5 per share, however, recent rumours suggest a curtailing of dividend could be on the cards this time around due to liquidity problems owing to the circular debt issue. Currently, AKD Securities is in the process of reviewing AKD Securities’ numbers of HUBC and wilt release a detailed note shortly.

Askari Bank Ltd: CY11 Result Preview

The much-awaited banking sector result season kicks off next week with Askari Bank Ltd (AKBL) scheduled to announce its full-year CY11 result on Tuesday, Feb 14’12. On an unconsolidated basis, AKD Securities expects AKBL to post NPAT of PkR1.06bn (EPS: PkR1.50) in CY11 against NPAT of PkR0.94bn (EPS: PkR1.33) in CY10, translating into growth of 12%VoY. While AKBL has posted minor losses in the last quarter of each of the last 3yrs, AKD Securities believes recent enhancement in FSV benefit may enable AKBL to breakeven in 4QCY11. Alongside the result, AKBL will likely announce a 15% bonus issue to meet CY11 MCR requirement of PkR8bn. That said, AKD Securities do not completely rule out the possibility of a rights issue as AKBL’s relatively low capital cushion (CY10 CAR: 10.2%) leaves little room for balance sheet expansion on the current capital base, particularly as the FSV benefit stands to be de-recognized over the medium-term. Recent talks regarding potential change in sponsor from Army Welfare Trust to Fauji Foundation lend credence to AKD Securities’ view. While AKBL (+10.3%CYTD) still trades at relatively attractive valuations (CY12F P/B: 0.41x), AKD Securities’ target price of PkR11.5/share implies a Neutral stance where risks over the medium- term may cap upside potential going forward.