Hub Power Company’s profit rose 7% to Rs1.34 billion during July to September 2011 compared with the previous year’s Rs1.24 billion.
Despite higher return on its old plant, the company is expected to have incurred losses on its new Narowal project since the new tariff has not been approved by National Electric Power Regulatory Authority which will incorporate exchange rate fluctuations and cost over-runs, said Topline Securities analyst Nauman Khan.
Financial charges for the company tripled to Rs1.67 billion from Rs559 million in the corresponding period last year. The increase is mainly attributed to increase in short-term borrowing due to inter-corporate debt, financing of investments in Laraib Energy project and finance cost payable on commercial and expansion facility of Narowal project, according to a BMA Capital research note.
The company’s main plant is expected to have operated at an average load factor of 77% whereas load factor for Narowal plant which came online in April is estimated at 75%, adds the note.
The company’s stock price fell Rs1.28 to close at Rs36.1 during trade at the Karachi Stock Exchange.
Production bonuses, profits from Narowal projects and efficiency gains from the new plant would be the major earnings driver for the company in the near future, according to analysts.
Published in The Express Tribune, October 27th, 2011.
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