Karachi, September 22, 2023 (PPI-OT): HUBC: 4QFY23 Management Call Takeaways
HUBC held an investor briefing session to discuss 4QFY23 financial results. Management also provided further details on key developments and future outlook for the Company.
The Company reported consolidated 4QFY23 earnings attributable to HUBC of PKR 23.91bn (EPS PKR 18.43), up by +2.4xy/y compared to PKR 7.02bn (EPS PKR 5.41) in the similar period last year. On quarterly basis, profitability is up by +2.1xq/q during 4QFY23.
Earnings improved on the back of 2.5xy/y rise in share of profit from associates and addition of subsidiary, Thar Energy Limited (TEL). Increase in share of profit was due to insurance proceeds received by China Power Hub\ Generation Company (CPHGC) and contribution from Prime International.
CPHGC completed Project Completion during Feb-2023 which has released HUBC to maintain Standby Letter of Credit (SBLC) to the tune of US$ 150mn. As a result, CPHGC can now distribute dividend to its shareholders and the Company expects dividends from CPHGC to be announced during FY24. Based on this, dividend payout is likely to remain strong during FY24.
HUBC held an investor briefing session to discuss 4QFY23 financial results. Management also provided further details on key developments and future outlook for the Company.
HUBC reported earnings growth of +2.4xy/y to PKR 18.4/share during 4QFY23
The Company reported consolidated 4QFY23 earnings attributable to HUBC of PKR 23.91bn (EPS PKR 18.43), up by +2.4xy/y compared to PKR 7.02bn (EPS PKR 5.41) in the similar period last year. On quarterly basis, profitability is up by +2.1xq/q during 4QFY23. This brings total FY23 profitability to PKR 57.55bn (EPS PKR 44.37), up by +102%y/y. The Company announced cash dividend of PKR 6.0/share along with the result bringing total cash payout for FY23 to PKR 30.0/share.
Earnings improved on the back of 2.5xy/y rise in share of profit from associates and addition of subsidiary, Thar Energy Limited (TEL). Increase in share of profit was due to insurance proceeds received by China Power Hub Generation Company (CPHGC) and contribution from Prime International. Finance cost remained higher due to increase in interest rates and borrowing.
Key highlights from management conference call
CPHGC completed Project Completion during Feb-2023 which has released HUBC to maintain Standby Letter of Credit (SBLC) to the tune of US$ 150mn. As a result, CPHGC can now distribute dividend to its shareholders and the Company expects dividends from CPHGC to be announced during FY24. Based on this, dividend payout is likely to remain strong during FY24.
During FY23, HUBC achieved Commercial Operations Date (COD) of 3 projects based in Thar including TEL and SECMC during Oct2022 and Thal Nova Limited (TNTPL) during Feb-2023. Both TEL and TNTPL remain in top 5 of the merit order list.
The availability of plants is above the requirement under the Power Purchase Agreement (PPA), however load factors remained low due to lower demand and lower transmission capacity.
The Company is in talks with CPPA regarding applicability of Liquidated Damages (LD) for HVDC. CPPA has asked HUBC to postpone the Thar projects so that PPA related LDs can be waived off.
There is not plan right now to convert base plant from FO to coal. The Company will consider the conversion plan if its economically viable and in the larger interest of the Country.
HUBC has been awarded Right of First Refusal (ROFR) for West Karachi Water Recycling Plant and will participate in competitive bidding for the project once announced by Government of Sindh.
With regards to ENI Assets, Prime International was awarded license for exploratory block SW Miano III. The management control lies with ENI employees. Turnaround project was completed in Jun-23 which is expected to enhance life of existing fields.