AKD Quotidian about — HUBC: 1QFY14 Result Preview

Karachi, October 23, 2013 (PPI-OT): HUBC is scheduled to announce its 1QFY14 result on Oct 24’13. AKD Securities expects the company to post NPAT of PkR2,612mn (EPS: PkR2.26) in 1QFY14, a growth of 24%YoY/32%QoQ.

According to AKD Securities the growth is expected to be led primarily by a decline of 53%YoY in financial charges on lower working capital requirements from the GoP’s circular debt retirement in Jun’13 (HUBC received cash payment of a substantial PkR75bn). Sequentially, AKD Securities expects revived generation from the Narowal plant after a complete shut-down in 4QFY13 to result in a 29%QoQ growth in sales and a lower penal interest to result in a 40%QoQ reduction in financial charges. Going forward, AKD Securities expect higher earnings from the Narowal plant and an improved liquidity situation across the energy chain from an increase in power tariffs to sustain the company’s payout ability.

However, payout concerns in the long-term from the company’s potential conversion to coal still loom, in AKD Securities view. At current levels, HUBC trades at an FY14F D/Y of 14.8% and provides an upside of 21% to AKD Securities TP of PkR78/share.

HUBC 1QFY14 Result Preview

(PkR mn)                                 1QFY14F        1QFY13         YoY
Sales                                     43,025       48,316         -11%
Operating costs                           38,767       44,297         -12%
Gross Profit                               4,258        4,020           6%
Selling and Admin cost                       110           91          21%
Finance Cost                                 902        1,818         -50%
Other Income                                  20            3         501%
NPAT                                       2,612        2,114          24%
EPS                                         2.26         1.83          23% 

KAPCO: 1QFY14 Result Preview
KAPCO is scheduled to announce its 1QFY14 result today. AKD Securities expects the company to post NPAT of PkR2,169mn (EPS: PkR2.46) in 1QFY14, a growth of 24%YoY. Key highlights of the result include 1) a substantial reduction of 55%YoY in financial charges to PkR1,015mn on the back of reduced payables, where the GoP paid KAPCO PkR41bn in lieu of circular debt and 2) load factor of 55% as compared to 47% on average in FY13 due to an improved cash cycle post circular debt retirement.

On a sequential basis, AKD Securities expects the company to post bottoming growth of 28%QoQ, where one-off late payment charges in 4QFY13 led to the growth. Going forward, AKD Securities expects a higher load factor in FY14 at 50%, an improved net interest spread on receivables/payables and currency depreciation to benefit KAPCO. At current levels, KAPCO offers a compelling FY14 D/Y of 15.2% and upside of 10% to AKD Securities TP of PkR67/share. Attractive valuations, benefits from energy sector reforms initiated by the government and a possible divestment in KAPCO by the GoP going forward could keep interest alive in the stock going forward.

KAPCO 1QFY14 Result Preview
(PkR mn)                           1QFY14F     1QFY13           YoY
Sales                               29,939      29,430           2%
Cost of Sales                       26,310      26,255           0%
Gross Profit                         3,629       3,175          14%
Operating Exp.                         140         110          27%
Other Operating Income                 812       1,792         -55%
 Operating Profit                    4,301       4,857         -11%
Finance Cost                         1,015       2,266         -55%
NPAT                                 2,169       1,754          24%
EPS                                  2.46        1.99

The post AKD Quotidian about — HUBC: 1QFY14 Result Preview appeared first on AsiaNet-Pakistan.

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