Hubco’s profit jumps 47% in Jul-Dec 2020

Surge comes on back of rupee depreciation, drop in finance cost

KARACHI:

Hub Power Company’s (Hubco) consolidated profit increased 47% to Rs16.88 billion in the first half ended December 31, 2020 mainly due to surge in profit from an associate company, rupee depreciation and significant cut in cost of finance, according to a bourse filing on Friday.

“The increase in profit is mainly due to higher share of profit from associate, China Power Hub Generation Company Limited (CPHGC), which started commercial operations on August 17, 2019, depreciation of rupee against dollar and lower financing costs,” Hubco said in a report to Pakistan Stock Exchange (PSX).

The profit had stood at Rs11.51 billion in the same period of the last year. The earnings per share translated to Rs12.60 in the half-year under review compared to Rs8.52 in the corresponding period of the last year.

The board of directors of the company recommended an interim dividend of Rs3 per share. This is in addition to Rs4 per share already paid to shareholders during the ongoing year.

The new entitlement would be paid to the shareholders whose names would appear in the register of members on April 9, 2021.

Hubco’s share price improved Rs0.61, or 0.72%, to close at Rs85.42 with a volume of over nine million shares traded at PSX. The rupee has depreciated 6% in the period under review, which helped the company gain growth in profit one way or the other way, according to AHL Research.

The share of profit from associates (net) surged 47% to Rs7.60 billion in the first half of the year compared to Rs5.15 billion in the same period of the previous year.

Finance costs dropped 40% to Rs3.73 billion compared to Rs6.25 billion. The drop in finance cost may be attributed to a drastic cut in the benchmark interest rate by 625 basis points during March-June 2020 to 7%. The sales revenue increased 9% to Rs26.79 billion in the period under review compared to Rs24.65 billion in the same period of the last year…”due to higher dispatches (power sales) compared with last year,” AHL Research added.

In 2QFY21 alone, net sales witnessed an increase of 4% to Rs10.99 billion due to a 12% increase in dispatches to 162 GWh. Gross margins of the company increased by four percentage points to 70%.

“The rise in margins is mainly attributable 6% rupee depreciation during 2QFY21,” the research house said.

During 2QFY21, the company recognised share of profit from CPHGC of Rs4.12 billion, up by 26% mainly due to 6% rupee depreciation, it said.

Finance costs decreased by 43% to Rs1.82 billion. “The decline in finance costs was led by lower interest rates.”