AVN 65.45 Increased By ▲ 0.50 (0.77%)
BAFL 30.65 Decreased By ▼ -0.86 (-2.73%)
BOP 4.83 Increased By ▲ 0.04 (0.84%)
CNERGY 3.72 Decreased By ▼ -0.12 (-3.13%)
DFML 14.26 Decreased By ▼ -0.15 (-1.04%)
DGKC 41.06 Decreased By ▼ -0.54 (-1.3%)
EPCL 46.56 Decreased By ▼ -0.14 (-0.3%)
FCCL 11.35 Increased By ▲ 0.06 (0.53%)
FFL 5.03 Decreased By ▼ -0.02 (-0.4%)
FLYNG 5.78 Decreased By ▼ -0.04 (-0.69%)
GGL 10.28 Decreased By ▼ -0.17 (-1.63%)
HUBC 67.03 Increased By ▲ 1.39 (2.12%)
HUMNL 5.68 Increased By ▲ 0.02 (0.35%)
KAPCO 27.85 Increased By ▲ 0.10 (0.36%)
KEL 2.19 Increased By ▲ 0.04 (1.86%)
LOTCHEM 24.83 Increased By ▲ 0.48 (1.97%)
MLCF 21.37 Decreased By ▼ -0.11 (-0.51%)
NETSOL 84.20 Decreased By ▼ -0.59 (-0.7%)
OGDC 85.94 Decreased By ▼ -1.31 (-1.5%)
PAEL 11.01 Increased By ▲ 0.03 (0.27%)
PIBTL 4.17 Decreased By ▼ -0.05 (-1.18%)
PPL 74.56 Decreased By ▼ -1.14 (-1.51%)
PRL 13.40 Decreased By ▼ -0.25 (-1.83%)
SILK 0.92 Increased By ▲ 0.03 (3.37%)
SNGP 40.44 Decreased By ▼ -0.89 (-2.15%)
TELE 5.86 Increased By ▲ 0.01 (0.17%)
TPLP 15.42 Decreased By ▼ -0.22 (-1.41%)
TRG 111.63 Decreased By ▼ -0.07 (-0.06%)
UNITY 13.76 Decreased By ▼ -0.22 (-1.57%)
WTL 1.14 Decreased By ▼ -0.02 (-1.72%)
BR100 4,037 Decreased By -26.9 (-0.66%)
BR30 14,412 Decreased By -56.6 (-0.39%)
KSE100 40,471 Decreased By -262.4 (-0.64%)
KSE30 15,163 Decreased By -67.2 (-0.44%)
Follow us

Kot Addu Power Company Limited (PSX: KAPCO) announced a significant jump in earnings in 9MFY19 and 3QFY19 recently, the second largest independent power producer in the country. However, the rise did not come from growth in the IPP’s top line as revenues for the firm declined by11 percent and 50 percent, respectively for 9MFY19 and 3QFY19.

The increase in KAPCO’s bottom line came from a steep jump in other income that increased by three times in 9MFY19 and by over two times in 3QFY19. Here the increase in gross margins also supported the company’s earnings as the cost of sales declined in proportion. However, the reason for the fall in revenues was lower power generated in the period under review. For 3QFY19, the IPP generated 385GWh of power with a load factor of only 13 percent, versus 58 percent in 3QFY18. Similarly, the load factor remained 34 percent in 9MFY19 versus 58.7 percent in 9MFY18.

Hence, KAPCO’s profits grew by 89 percent year-on-year in 9MFY19 largely due weaker currency that inflated the ROE component of the capacity payments as well as higher other income led by piling receivables; while the growth in finance cost contained some of the growth. KAPCO’s net profits likely include true-up income. Recall that in 1HFY19, the company saw a significant jump in other income head, which according to the notes to the annual accounts, was due to the “true-up income” along with interest on late payment (penal income) from WAPDA. True-up income represented income resulting from change in US Dollar - PKR exchange rate exceeding the threshold defined in PPA, compared to the rates used for indexation calculation of relevant CPP invoices.

Unlike previous quarters, KAPCO resumed cash dividend announcement, announcing the first interim cash dividend of Rs1.5 per share. However, this payout was lower than dividends for 9MFY18 i.e. Rs4.35 per share. The company’s liquidity took a small breather when the government injected Rs200 billion to partially clear the circular debt, but the threat of receivables pilling up remains significant for KAPCO. In addition to circular debt woes, the looming PPA renewal has become a headache for KAPCO.

Copyright Business Recorder, 2019

Comments

Comments are closed.

KAPCO – up on weaker currency

Dar hits out at Imran Khan’s ‘irresponsible tweet’ about current govt

Islamabad court sends Sheikh Rashid on 14-day judicial remand

Analyst fears further rupee decline in coming days

Wikipedia asks Pakistan to restore access to its service

Pakistan to appeal to Taliban leader after terrorism surges

US allows seized Russian money to go to Ukraine aid: report

Industry yet to export any amount of sugar

PTI chief won’t attend APC: Umar

Alluding to PTI, PM asks where Rs417bn spent?

Govt says ‘will have to’ agree to IMF conditions