First the exiting of international sponsors with International Power following Xenal and then the tax and dividend dispute, one of the countrys largest IPPs Hub Power Company (Hubco) has remained in the limelight of late. In the midst of the debilitating situation of the power sector, Hubco has been able to paddle its way through with slightly higher than expected results. The solid growth in top line was the main reason for the reasonable growth in the bottom line during the period under review. For 9MFY12, the turnover swelled by a hefty 54 percent compared to 9MFY11. This prop up in the total revenues is said to have been brought by two main reasons. First, swelling furnace oil prices have led to the expansion in the Companys revenues during 9MFY12. Secondly, the Narowal power plant became operational in April 2011, beefing up the top line. The plant is said to have added 22MW to the national grid. With an equal increase in operating costs, gross profit has increased by 64 percent during the said period with margins increasing marginally from 8.07 percent for 9MFY11 to 8.60 percent for 9MFY12. The operational cost increase may have been due to the residual fuel oil costs and the operation and maintenance (O&M) contract servicing. The EPS witnessed a rise of 16 percent and 37 percent for 9MFY12 and 3QFY12, respectively, over comparable periods due to massive increase in the turnover and rupee depreciation. 3QFY12 posted healthy growth in earnings due to the better operations at both the main Hub plant and the new Narowal plant. The earnings were in part subdued due to 1.82 times increase in the finance cost. This escalation in financial charges is categorically attributable to the working capital requirements associated to the vicious circular debt and the funding of the Narowal plant. On the consolidated basis, the Companys profit after tax stood at Rs.5.27 billion for 9MFY12, a jump of more than 24 percent compared to the similar period of last year. 3QFY12 witnessed a bulky earnings growth of more than 44 percent over comparable period on consolidated basis. Amid the latest controversy regarding the tax issue with FBR and circular debt lingering in the backdrop, the Company did not announce any dividend for the period. While the positive aspect of the outlook for the Company rests on the announcement of Narowal tariff which is likely to raise earnings for the Company.
===================================================================== Hub Power Co (unconsolidated) ===================================================================== mn Rs 9MFY12 9MFY11 YoY 3QFY12 3QFY11 YoY ===================================================================== Turnover 123,818 80,328 54% 44,370 31,126 43% Operating Costs 113,171 73,845 53% 40,594 28,892 41% Gross Profit 10,647 6,483 64% 3,776 2,235 69% Finance Cost 5,421 1,900 185% 1,705 685 149% Profit for the Period 4,972 4,284 16% 1,974 1,442 37% EPS (Rs) 4.30 3.70 16% 1.71 1.25 37% Gross Margin 8.60% 8.07% 8.51% 7.18% Net Margin 4.02% 5.33% 4.45% 4.63% =====================================================================
Source: KSE notice
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