By: Intermarket Securities Limited
Nishat Chunian Power Limited has announced FY15 NPAT of PkR3.09bn (EPS: PkR8.41) in FY15, up by 7%YoY vs. NPAT of PkR2.90bn (EPS: PkR7.90) in FY14. In 4QFY15 alone, earnings came lower than expectations to clock in at PkR666mn (EPS: PkR1.81), down 19%YoY/16%QoQ. Results were accompanied with a final DPS of PkR2.00 taking full-year DPS to PkR7.50 (payout: ~90%).
Modest 7%YoY growth in FY15 came about due to (i) higher efficiency and (ii) nominal penal income markup seeing as circular debt remained largely in check (outstanding receivables as at Mar’15: PkR4.37bn). On a sequential basis however, earnings were weak in 4QFY15 on maintenance expenditure during the quarter (75% completion only due to peak summer season with next scheduled for Oct’15). Nevertheless the nominal increase in fuel savings lent support to the bottomline. Other takeaways included: (i) load factor of 75% during 4QFY15 taking FY15 avg. to 83% (FY14: 79%) and (ii) 23%YoY reduction in finance cost in 4QFY15 which can have a more visible impact going forward.
NCPL’s FY15 payout of ~90% was significantly above historical average payout of 80%. Assuming 90% is the new payout benchmark, NCPL offers a FY16F D/Y of 13.2% which is attractive in the backdrop of 12m T-bill yield of 6.54%. We flag any sharp upsurge in int’l oil price leading to increase in systemic circular debt as a key risk.