Hubco reveals plans for mineral mining
Hub Power Company (Hubco) has announced that it will further diversify its business portfolio by entering into the mineral mining sector to ramp up earnings as its core business of electricity production from expensive oil continued to stand low on the government's economic merit order amid power pricing crisis in the country.
Along with the diversification announcement, the company on Monday reported a net consolidated profit of Rs75.29 billion for the year ended June 30, 2024, up 21.5% compared to Rs62 billion in the previous year, due to notable earnings from associated firms. It translated into earnings per share of Rs53.98 in FY24 compared to Rs44.37 last year.
In a notification sent to the Pakistan Stock Exchange (PSX), Hubco Company Secretary Faiza Kapadia Raffay revealed that the company had entered into a joint venture agreement with mining firm Ark Metals and its shareholders for the exploration and development of mineral mines in Pakistan.
The implementation of the agreement is subject to necessary regulatory approvals and consents.
The power company, however, did not share other details of the joint venture like the size of the project, Topline Research analyst Myesha Sohail noted in a commentary, adding that details were awaited to work out the impact of the new project on Hubco.
In the financial results, Hubco board of directors recommended a final cash dividend of Rs8.50 per share. It was in addition to the already paid interim cash dividend of Rs11.50 per share for the year.
Hubco share price increased 5.55%, or Rs8.11, and closed at Rs154.35 with a volume of 23.21 million shares at the PSX on Monday.
Earlier, in its third quarterly report for the period ended March 31, 2024, the company announced that it had entered into a definitive agreement for acquiring shares in Sindh Engro Coal Mining Company (SECMC).
The completion of this transaction is subject to necessary corporate and regulatory approvals, consents and other conditions on which discussion is underway with SECMC stakeholders. "We are working on multiple renewable energy opportunities, including solar and wind-solar hybrid projects. RFPs (Request for Proposals) have been initiated by K-Electric and we are preparing proposals for bid submission. We continue to explore opportunities in new areas of interest, including battery energy storage systems as well as electric vehicles and their associated value chain," the report said.
The company reported that it achieved higher earnings in the first three quarters "mainly due to the entire period impact of COD (commissioning of two Thar coal-run power plants) – Thar Energy Limited and ThalNova – achieved in October 2022 and February 2023, respectively, higher share of profit from associates and higher revenue driven by depreciation of PKR (rupee) against the US dollar parity offset by higher finance cost due to higher interest rates."
Latest profit and loss accounts of the company for FY24 suggest that net profit surged 21.5% mainly due to the increase in revenue to Rs130.5 billion from Rs114.26 billion last year.
The share of profit from associates and joint ventures increased to a net Rs49.36 billion compared to Rs34.31 billion last year. Other income (mainly from the rupee-dollar parity) ticked down to Rs3.30 billion compared to Rs3.58 billion last year.
Finance cost rose to Rs26.74 billion in the year under review compared to Rs19.32 billion last year.