Morning Call about HUBC: Earnings to increase by 10% YoY to PKR 4.08/share in 9MFY12 – Arif Habib Limited

Karachi: Hub Power Company Limited (HUBC) is scheduled to announce its 9MFY12 financial results on April 25, 2012.

According to Arif Habib Limited expects that the company will earn profit after tax (PAT) of PKR 4,727mn (EPS: PKR 4.08) compared to PKR 4,284mn (EPS: PKR 3.70) in the corresponding period last year, projecting a 10% YoY jump. This improvement in earnings is mainly attributable to 3.5% devaluation of PKR against USD coupled with 8.5% increase in PCE component during the period. However, 3 times higher financial charges due to the interest on loan acquired to finance equity portion of Narowal project, penal interest charged by Pakistan State Oil on late fuel payments and increased short term borrowing due to the circular debt has affected the profitability of the company. In 3QFY12, Arif Habib Limited expects company to earn PAT of PKR 1,729mn as compared to PKR 1,757mn earned in 2QFY12 projecting a decline of 2% QoQ mainly due to higher maintenance and financial costs.

Financial Highlights (PKR million) 3QFY12E 2QFY12 QoQ 9MFY12 9MFY11 YoY
Turnover 39,698 38,730 2% 119,146 80,328 48%
Operating Cost 35,926 34,951 3% 108,504 73,845 47%
Gross Profits 3,771 3,779 0% 10,642 6,483 64%
Other Income 17 16 5% 48 16 204%
General and Admin Expenses 103 100 3% 290 314 -8%
Finance Cost 1,957 1,938 1% 5,673 1,900 199%
PAT 1,729 1,757 -2% 4,727 4,284 10%
EPS 1.49 1.52 -2% 4.08 3.70 10%
Sources: Company Financial and AHL Research

NPL: Company is expected to earn PKR 3.36/share in 9MFY12

Nishat Power Limited (NPL) will be posting its 9MFY12 financial result on April 25, 2012. Arif Habib Limited’s estimates for the company’s profitability for the period work out to PKR 1,189mn (EPS: PKR 3.36/share) against PKR 1,828mn (EPS: PKR 5.16/share) in 9MFY11, depicting a decline of 35% YoY. In 9MFY11 the company booked an incremental revenue of PKR 579mn (PKR 1.76/share) as NEPRA announced post COD tariff. On QoQ basis, Arif Habib Limited expects the company’s net income to decline by 18.7% to PKR 340mn (EPS: PKR 0.96) in 3QFY12 as against of PKR 418mn (EPS: PKR1.18) in 2QFY12. This decline in earnings is attributable to lower load factor and higher maintenance cost incurred during the period. However, Arif Habib Limited expects fuel savings to contribute PKR 0.16/share at an assumed thermal efficiency of 46.5% in 3QFY12.

Financial Highlights (PKR million)  3QFY11E 2QFY11  %Chg. 9MFY12E 9MFY11 %Chg.
Sales 3,792 4,213 -10.0% 14,269 15,195 -6.1%
Cost of Sales 2,654 3,036 -12.6% 10,761 11,148 -3.5%
Gross Profit 1,138 1,178 -3.4% 3,508 4,047 -13.3%
Administrative Expenses 21 20 5.0% 60 48 24.5%
Other Operating Income 15 16 -5.0% 36 30 18.8%
Profit from Operations 1,132 1,174 -3.6% 3,484 4,029 -13.5%
Finance Cost 787 750 5.0% 2,284 2,190 4.2%
Profit before Tax 344 424 -18.7% 1,201 1,839 -34.7%
Profit after Tax 340 418 -18.7% 1,189 1,828 -35.0%
Earnings per share 0.96 1.18 -18.7% 3.36 5.16 -35.0%
Source: AHL Research

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