By: Azee Securities Private Limited
In our today’s morning report we would discuss the performance of the Power sector during the 1QFY16. We have taken four companies of the sector in contribution which includes; The Hub Power Company Limited, Kot Addu Power Company Limited (KAPCO), Nishat Power Limited (NPL) and Nishat Chunian Power Limited (NCPL).
Profitability drop 1% YoY: The cumulative profit of four listed companies of the sector decreased by 1% YoY to Rs 5.95 billion in 1QFY16 as against Rs 6.01 billion in 1QFY15 on account of lower other income due to fall in penal income and lower sales which reduces efficiency gains .
Net sales fall by 40%: Four listed IPPs revenue decline by 40.3% to Rs 56.61 billion against Rs 94.84 billion in 1QFY15 owing to lower furnace oil prices and load factor. Similarly, Cost of sales fall by 44% to Rs 47.61 billion versus Rs 84.83 billion in 1QFY15. This translated into gross profit of Rs 8.99 billion versus Rs 10.01 billion in 1QFY15, depicting decline by 10%. Other income too significantly down by 41.3% to Rs 968 million versus Rs 1,649 million in 1QFY15 due to lower penal income. On the other hand, decline in finance cost due to lower interest rates provided much needed support the bottom line as finance cost came down to Rs 2.23 billion in 1QFY16 from Rs 4.14 billion in 1QFY15, showing drop of 46%.