By: WE Financial Services Limited
We will discuss on the performance of Hub Power Company Limited (HUBC) in 1QFY16 along with recommendation to the investors in our today’s morning briefing.
PAT trims 2% YoY: Owing to multiple factors which include; flat indexation, hike in repair & maintenance cost, and payment to ex-O&M Operator of the Hub plant due to early termination, the profit after taxation (PAT) of HUBC fell 2% YoY in 1QFY16 to Rs 2,042 million (EPS: Rs 1.76) versus a PAT of Rs 2,094 million (EPS: Rs 1.81) in 1QFY15. The decline in earning was more significant on QoQ basis where the bottom-line dropped 38% YoY as the company earned Rs 3,293 million (EPS: Rs 2.85) in 4QFY15. This decline was mainly attributed to heavy drop in other income.
Revenue down by 44%: The net revenue of the company witnessed a huge decline of 44% YoY in 1QFY16 owing to drop in furnace oil prices being the major factor. The net revenue of the company totaled Rs 25,662 million in 1QFY16 resulting in a huge drop of 44% YoY when compared to a net revenue of Rs 45,754 million in the identical period in FY15. The electricity sold to WAPDA reduced to 1,812Gwh during the period under review as against 2,042Gwh of electricity sold in 1QFY15. The average load factor of the Hub plant dropped to 68% in 1QFY16 versus an average load factor of 77% in 1QFY15. As far as Narowal plant is concerned, the total electricity sold to WAPDA from Narowal plant fell to 293Gwh in 1QFY16 versus 413Gwh of electricity sold in 1QFY15. The average load factor of the Narowal plant dropped to 62% in 1QFY16 versus 88% in 1QFY15. However electricity produced by the Laraib Energy remained higher during the quarter on back of improved hydrology and plant availability.