Hub Power Company Limited – 1QFY10 Earnings Preview
Hub Power Company Limited (Hubco) is scheduled to announce its 1QFY10 results on October
28, 2009. Profitability is estimated to observe a considerable jump on the back of expected 24%
YoY increase in project company equity component of capacity purchase price (CPP). Moreover,
11.7% YoY depreciation of PKR against USD is expected to further boost escalable component of
the CPP. We expect the company to post net earnings of PKR1,271mn (EPS: PKR1.10) in 1QFY10
compared to PKR702mn (EPS: PKR0.61) in 1QFY09, an increase of 80% YoY. We do not expect
any payout as the company historically declares dividend on half yearly basis.
Hubco is continuing with its expansion activity with Narrowal power project of 214MW,
expected to come online in March 2010. Furthermore, the company is vying to build a 84MW
hydro power project, financial close of which is expected by end of October 2009. At yesterday’s
closing price of PKR31.13/share, the stock offers FY10E dividend yield of 9.2% and is trading at a
28% discount to our June 2010 Target Price of PKR43/share. BUY!