Karachi, February 28, 2023 (PPI-OT): HUBC: Corporate briefing session key takeaways
The Hub Power Company Limited (HUBC) held its 1HFY23 Analyst Briefing today to discuss financial performance and outlook. To recall, the company posted a consolidated EPS of Rs10.25 for 2QFY23, up 177% YoY and 55% QoQ, taking 1HFY23 EPS to Rs17.27, up 83% YoY. Alongside the result, the company also announced a dividend of Rs5.75 for the quarter taking cumulative dividend for the first half to Rs21.25/share.
Despite sequentially lower sales and elevated finance costs, earnings witnessed improvement driven by better gross margins, higher dividend income from Narowal (Rs6.05/sh before tax) and higher profit contribution from associates (Rs8.16/sh before tax).
Total power capacity for the company currently stands at 3,581MW while total mining capacity stands at 7.6MTPA (post completion of 2nd phase of SECMC).
The company primarily relies on RFO for power generation accounting for 42% of generation capacity followed by Imported coal/Thar coal/Hydel accounting for 37%/18%/2% respectively.
During the ongoing year, the company achieved COD on three Thar based projects. Thar Energy Ltd (330MW) and SECMC Phase 2 (7.6MTPA) achieved COD in Oct-22 while ThalNova Power (330MW) followed in Feb-23.
The projects are expected to reduce reliance on imported fuels leading to foreign exchange savings and lower cost of electricity.
Price of coal post completion of SECMC phase 2 is expected to be close to US$45/ton (from US$65/ton earlier).
Share of profit from CPHGC improved YoY owing to 1) insurance claim of US$65mn relating to transformer damage last year and 2) higher availability of 84% during 1HFY23 as against 45% during last year leading to higher capacity payments.
Coal supply for CPHGC has remained intact throughout despite issues regarding opening of LCs. Moreover, with regard to possibility for CPHGC of shifting to local coal, management commented 100% use is not possible, however, a blend of up to 15% composition is possible.
Load factor for TEL remained the highest at 79%, however, management expects it to stay even higher at 85%+ as it remains high in the merit order producing electricity at Rs4-5/kwh.
Management believes that power evacuation issues are expected to be resolved over the next few months.
Currently operating in the Power and Oil and Gas sectors, management plans to enter the Water and EV infrastructure industries over the long run.