HUBCO Announces a 118.44% Increase in Profits Over Last Year

Hub Power Company (Hubco) which is one of the largest private power producers in the country announced its consolidated financial results for the year ended June 30th, 2020.

Hubco’s consolidated profits improved massively by 118.44% to Rs. 26.06 billion as compared with Rs. 11.93 billion recorded in FY19. The improvement came following a notable drop in its operating cost and an increase in the share of profit from associates.

The increase in profit is likely due to recognition of share of profit from associate CPHGC which started commercial operations, lower repair and maintenance expenses, and depreciation of Rupee against USD partly offset by the recognition of a loss on shares of China CPHGC to be transferred to Government of Balochistan, and higher financing costs.

A.A.H Soomro, managing director at Khadim Ali Shah Bukhari Securities told ProPakistani,

The main theme in the stock nowadays is the result of IPP talks. Removal of Dollar Indexation, eventual take-and-pay and reduction in RoEs are medium term negatives for the valuation. However, agreements would actually be cash-positive thereby, increase capacity to pay-out. Thus, it could take the stock back to triple digits. Meanwhile, results are not that of an anchor these days.

The unconsolidated net profit during the period under review was Rs. 10.16 billion as compared to Rs. 8.03 billion last year. The increase in unconsolidated profit is likely due to lower repair and maintenance expenses, higher income from management services to Thar Energy Limited, and depreciation of Rupee against USD partly offset by higher financing costs.

However, the company’s consolidated sales were down by 17.20% to Rs. 48.32 billion in FY20 as compared to last year’s Rs. 58.34 billion due to the closure of HUBCO’s base plant. On the flip side, the operating costs were halved to Rs. 17.83 billion, down by 51.63% as compared with last year’s cost of Rs. 36.86 billion. This took the gross profits to Rs. 30.49 billion, up by 42% as compared to Rs. 21.48 billion.

The other income was down to Rs. 410 million from Rs. 526 million. The finance cost saw an increase of 61% during the year. It was increased to Rs. 11.90 billion as compared to Rs. 7.40 billion.

The share of profit from associates was reported at Rs. 13.70 billion as compared to a loss of Rs. 433 million last year.

Earnings per share of the company increased to Rs. 19.31 from Rs. 9.37. Moreover, the company did not announce any cash dividend for FY20.

At the time of filing this report, HUBCO’s shares were trading at Rs. 84.21, down by Rs. 0.44 or 0.52%, with a turnover of 4.84 million shares on Wednesday.