FBR freezes account, Hubco appeals in Supreme Court for stay – Alfalah Securities Limited

Karachi: The Federal Board of Revenue (FBR) has blocked the accounts of the Hub Power Company (Hubcap) along with dispatch of PkR 3.0 per share interim dividends as the firm was unable to pay over PkR3 billion worth of taxes as well as penalties, as notified to KSE.

According to Alfalah Securities Limited, the company is facing difficulties in paying due taxes as the government is unable to clear outstanding amount to Hubcap because of the circular debt issue. Consequently, Hubcap filed an appeal in the Supreme Court along with a stay application to avoid the restriction imposed by the FBR. In this regard, Hubcap has also applied to SECP a request to delay the payment of dividends.

The company operates an oil‐fired power station of 1,200 MW in Balochistan (Hub plant) and 214MW oil‐fired power station in Punjab (Narowal plant). It also has a 75% controlling interest in Lariat Energy Limited which is an under construction hydel power project of 84MW. Alfalah Securities Limited believes that Hubcap is worth a stock to hold in one’s portfolio due to its risk aversive business model, upward earnings curve, handsome payouts and business growth. The stock offers FY12E dividend yield of around 17.0% however, the uncertainty is likely to prevail till the matter is resolved.

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