The two largest independent power producers – Hub Power Company Limited (PSX: HUBC) and Kot Addu Power Company Limited (PSX: KAPCO) - have surprised the market with their better-than-expectation financial performance for the first quarter of FY20. HUBC has posted a growth of 86 percent year-on-year in its profits, while KAPCO’s earnings have increased by 84 percent year-on-year in 1QFY20.
| Kot Addu Power Company Limited | |||
| Rs(mn) | 1QFY20 | 1QFY19 | YoY |
| Sales | 35,365 | 31,595 | 12% |
| Cost of sales | 30,141 | 27,978 | 8% |
| Gross profit | 5,224 | 3,617 | 44% |
| Administrative expenses | 207 | 177 | 17% |
| Other operating expenses | #DIV/0! | ||
| Other income | 4,367 | 2,529 | 73% |
| Profit from operations | 9,385 | 5,969 | 57% |
| Finance cost | 2,292 | 2,099 | 9% |
| Profit before tax | 7,093 | 3,871 | 83% |
| Taxation | 2,060 | 1,130 | 82% |
| Profit after tax | 5,033 | 2,741 | 84% |
| EPS (Rs) | 5.72 | 3.11 | 84% |
| Gross marin | 14.77% | 11.45% | |
| Net margin | 14.23% | 8.67% | |
| Hub Power Company Limited (Consolidated) | |||
| Rs(mn) | 1QFY20 | 1QFY19 | YoY |
| Turnover | 14,081 | 17,989 | -22% |
| Operating costs | 6,590 | 13,151 | -50% |
| Gross profit | 7,491 | 4,838 | 55% |
| General and administration expenses | 449 | 314 | 43% |
| Other income | 68 | 51 | 34% |
| Other operating expenses | 23 | 1 | 1986% |
| Profit from operations | 7,088 | 4,574 | 55% |
| Finance costs | 3,059 | 1,322 | 131% |
| Share of profit/(loss) from associates | 1,873 | (61) | |
| Profit for the period | 5,823 | 3,124 | 86% |
| EPS (Rs/share) | 4.29 | 2.47 | 74% |
| Owners of holding company | 5,568 | 2,960 | 88% |
| Non controlling interest | 255 | 164 | 56% |
| 5,823 | 3,124 | 86% | |
| Gross margin | 53.2% | 26.9% | |
| Net margin | 41.4% | 17.4% | |
| Source: PSX | |||
KAPCO’s growth in the bottomline starts from the top. the firm’s revenues have seen an increase of over 12 percent year-on-year primarily due to better utilization factors because of increase in the power generation from furnace oil in September 2019 that has otherwise remained subdued due to phasing out of the expensive fuel. At the same time, lower cost of sales due to currency depreciation helped the company improve its gross margins. Higher other income and contained finance cost also lifted the bottomline.
On the other hand, HUBC witnessed a decline in its consolidated revenues, which was due to lower power generation at its base plant at Hub. Lower load factor of the main plant at Hub also meant lower operating costs, which along with currency depreciation was the main factor behind better gross profit in 1QFY20. The company’s consolidated earnings growth was also assisted by the share of profits from China Power Hub Generation Company, that commissioned the 2x660MW coal power plants in August. HUBC’s consolidated earnings were impacted by twice the increase in finance cost due to the increase in financing the capex. This is also why the IPP did not announce a cash dividend for 1QFY20.
Comments
Comments are closed.