April 27, 2020 (PPI-OT)

HUBC: PKR depreciation and higher share of profit from CPHGC to lift 3QFY20 EPS to PKR 5.43

The Hub Power Company Limited's (HUBC) board meeting is scheduled on 28th Apr-20 to announce financial result for 3QFY20, where we expect the company to post earnings of PKR 7.04bn (EPS PKR 5.43), up by +2.2xYoY,

We estimate growth in earnings on the back of a) contribution of profit from China Power Hub Generation Company (CPHGC) plant and, b) 11%YoY PKR depreciation,

On a quarterly basis, earnings are expected to lift by +28%QoQ during 3QFY20 on the back of one-off expense booked in 2QFY20 relating to loss on share transfer to Government of Baluchistan in respect of 1.5% stake in CPHGC,

We recommend a 'BUY" stance on HUBC with our Dec-20 target price of PKR 151.0/share offering 101% upside from last close. The company is currently trading at FY21 P/E of 3.1x.

Earnings to clock in at PKR 5.43/share for 3QFY20, up by +2.2xYoY

The Hub Power Company Limited's (HUBC) board meeting is scheduled on 28th Apr-20 to announce financial result for 3QFY20, where we expect the company to post earnings of PKR 7.04bn (EPS PKR 5.43), up by +2.2xYoY, compared to PKR 3.16bn (EPS PKR 2.44) in the same period last year. We estimate growth in earnings on the back of a) contribution of profit from China Power Hub Generation Company (CPHGC) plant and, b) 11%YoY PKR depreciation. However, growth in earnings is expected to be limited by +62%YoY rise in finance cost on account of higher interest rate and mark up on LT loans for new projects. We foresee HUBC to withhold cash payout during the quarter.

EPS to rise by +28%QoQ in absence of one-off share transfer cost

On a quarterly basis, earnings are expected to lift by +28%QoQ during 3QFY20. We expect the growth in earnings on sequential basis on the back of one-off expense booked in 2QFY20 relating to loss on share transfer to Government of Baluchistan in respect of 1.5% stake in CPHGC.

Recommendation

We recommend a 'BUY' stance on HUBC with our Dec-20 target price of PKR 151.0/share offering 101% upside from last close. The company is currently trading at FY21 P/E of 3.1x.

© Pakistan Press International, source Asianet-Pakistan