KOHE 1HFY14 EPS expected at PKR2.72 – Elixir Research
By: Mubashir Anis Silat,
(+92-21) 3569 4679
Elixir Securities Pakistan (Pvt.) Ltd
KOHE is scheduled to announce its 1HFY14 results onFebruary 12, 2014. We expect KOHE to post profit of PKR462mn (EPS: PKR2.72) for 1HFY14, up 22% YoY. 2QFY14 EPS is estimated at PKR1.29, down 1% YoY. We expect KOHE to payout PKR2/share along with the results.
Maintenance cost during the quarter to weigh in on earnings
We expect maintenance costs to remain high during the quarter with 8k hour engine overhaul occurring during the period. The same is expected to weigh in on the profits for the quarter. We expect stores and spares cost to be higher by PKR0.2/share compared to the same period last year and PKR0.4/share compared to the previous quarter where no overhauls took place. Despite major overhaul during the quarter earnings are expected to decline by a meager 1% YoY due to lower finance cost (-0.28/share) and increase in dollar indexed capacity payments (+0.11/share).
Turbo chargers to augment efficiency gains
Recently installed turbo chargers are expected to augment efficiency, where the management expects a further 1gm/kwh saving from the project. Factoring in this efficiency project, we expect fuel savings to clock in at 7.5gms/kwh. Utilization for the quarter stood at ~76% compared to 61% in the same period last year. We expect fuel savings to contribute ~PKR0.77/share to 2QFY14 earnings.
Our DDM based Dec-14 PT for KOHE of PKR46 offers an upside of 23%. At current levels KOHE offers an USD IRR and dividend yield of 13.4/13.4% against average IRR and dividend yield of 12.5/12.6% in our IPP space. BUY!