Hubco profits fall on higher charges
Narowal project expected to start operation before April.
KARACHI:
Hub Power Company (Hubco) has announced a drop in net profit on higher financial charges in the second quarter of fiscal 2010-11.
The net profit fell 9.96 per cent to Rs1.57 billion during October to December 2010 compared with Rs1.75 billion in the same quarter the previous year, according to a notice sent to the Karachi Stock Exchange on Tuesday.
The company also announced an interim cash dividend of Rs2.5 per share.
Financial charges of the power producer swelled 48 per cent to Rs657 million on the back of ballooning circular debt. The company’s receivables stood at Rs88 billion as of February 22, while it has to pay Rs76 billion to fuel supplier Pakistan State Oil (PSO). In response, PSO cut fuel supplies to the power producer on Thursday last week.
The cash strain is because of rising receivables from the Water and Power Development Authority (Wapda).
Bonus entitlement
Hubco is entitled to receive a bonus on generating more than 6,791 gigawatts per hour (Gwh) in a year, according to the Power Purchase Agreement.
The company is expected to have dispatched 8,340 Gwh to Wapda, 0.7 per cent higher than 8,282 GwH dispatched in 2009.
Hence, the generation bonus earned by the company is expected to bring Rs327 million or Rs0.28 per share during the first half of 2011, according to BMA Capital analyst Nurali Barkatali.
The project
Despite Narowal project getting delayed for about a year now, it is expected to start in the next 60 days which will potentially trigger buying interest, added Barkatali.
Furthermore, with the 1,200-megawat plant being in the south where cheaper alternatives are scarce, increasing electricity demand should ensure that Wapda utilises the plant to its maximum capacity, thus generation bonus would continue to be a surprise factor going forward, concluded Barkatali.
Published in The Express Tribune, February 23rd, 2011.
Hub Power Company (Hubco) has announced a drop in net profit on higher financial charges in the second quarter of fiscal 2010-11.
The net profit fell 9.96 per cent to Rs1.57 billion during October to December 2010 compared with Rs1.75 billion in the same quarter the previous year, according to a notice sent to the Karachi Stock Exchange on Tuesday.
The company also announced an interim cash dividend of Rs2.5 per share.
Financial charges of the power producer swelled 48 per cent to Rs657 million on the back of ballooning circular debt. The company’s receivables stood at Rs88 billion as of February 22, while it has to pay Rs76 billion to fuel supplier Pakistan State Oil (PSO). In response, PSO cut fuel supplies to the power producer on Thursday last week.
The cash strain is because of rising receivables from the Water and Power Development Authority (Wapda).
Bonus entitlement
Hubco is entitled to receive a bonus on generating more than 6,791 gigawatts per hour (Gwh) in a year, according to the Power Purchase Agreement.
The company is expected to have dispatched 8,340 Gwh to Wapda, 0.7 per cent higher than 8,282 GwH dispatched in 2009.
Hence, the generation bonus earned by the company is expected to bring Rs327 million or Rs0.28 per share during the first half of 2011, according to BMA Capital analyst Nurali Barkatali.
The project
Despite Narowal project getting delayed for about a year now, it is expected to start in the next 60 days which will potentially trigger buying interest, added Barkatali.
Furthermore, with the 1,200-megawat plant being in the south where cheaper alternatives are scarce, increasing electricity demand should ensure that Wapda utilises the plant to its maximum capacity, thus generation bonus would continue to be a surprise factor going forward, concluded Barkatali.
Published in The Express Tribune, February 23rd, 2011.