HUBC beats analyst estimates but disappoints on dividend
Insight Research has just released an update on Hub Power Company’s recent quarterly results. Here are the important points from the HUBC earnings announcement:
Strong Growth in Profits
In its 3QFY24 results, Hub Power Company (HUBC) has reported a consolidated Profit After Tax (PAT) of approximately PKR17.2 billion, with Earnings Per Share (EPS) at PKR13.3. This marks a significant increase of 53% year-over-year (YoY) from PKR11.2 billion (EPS: PKR8.7) in the same period last year. The boost in profits is primarily attributed to higher profit from associates, reduced finance costs, and increased capacity payments. Sequentially, earnings have also risen by 12%.
Revenue Growth
HUBC’s revenue surged by 17% to PKR31.8 billion in 3QFY24, largely driven by higher capacity payments.
Improved Gross Margins
The company’s gross margins improved by 3.3 percentage points year-over-year to reach 51.6%. This enhancement was a result of PKR devaluation along with improvements in the u-shaped PCE component of the base plant.
Associates’ Contribution
Hub Power saw a remarkable increase in its share of profit from associates, rising by 87% YoY and 15% QoQ to PKR12.1 billion. This growth is possibly attributed to increased profit share from China Power Hub Generation Company (CPHGC).
Rising Finance Costs
Finance costs increased by 40% YoY, totaling PKR6.6 billion in 3QFY24, due to higher interest rates and an increase in short-term borrowing.
Effective Tax Rate
The effective tax rate for the quarter stood at 16.3% in 3QFY24, compared to 14.2% and 15.7% in 3QFY23 and 2QFY24, respectively.
Cash Dividends
In addition to the results, HUBC announced a cash dividend of PKR2.5 per share, bringing the total cash dividend for 9MFY24 to PKR11.5 per share, compared to PKR24.0 per share in the same period last year. The dividend was slightly disappointing to investors which resulted in a price crash right after the announcement.
| Financials (PKRmn)* | 3QFY24 | 3QFY23 | 2QFY24 | YoY | QoQ | 9MFY24 | 9MFY23 | YoY |
|---|---|---|---|---|---|---|---|---|
| Net Sales | 31,791 | 27,231 | 29,913 | 17% | 6% | 95,434 | 81,918 | 16% |
| Cost of Sales | 15,401 | 14,098 | 13,161 | 9% | 17% | 45,555 | 46,201 | -1% |
| Gross Profit | 16,390 | 13,133 | 16,752 | 25% | -2% | 49,879 | 35,717 | 40% |
| Gross Margin (GM) | 51.6% | 48.2% | 56.0% | 52.3% | 43.6% | |||
| Selling & Distribution | 574 | 342 | 692 | 68% | -17% | 1,612 | 974 | 65% |
| Financing Cost | 6,597 | 4,721 | 6,977 | 40% | -5% | 20,643 | 11,845 | 74% |
| Other Income | 778 | (159) | 900 | -588% | -14% | 1,997 | 748 | 167% |
| Share of Associates’ Profit | 12,104 | 6,476 | 10,565 | 87% | 15% | 34,703 | 19,553 | 77% |
| Profit Before Tax (PBT) | 22,074 | 14,308 | 20,387 | 63% | 8% | 63,985 | 42,680 | 50% |
| Taxation | 3,605 | 2,034 | 3,203 | 77% | 13% | 10,015 | 6,252 | 60% |
| Net Income | 18,468 | 12,274 | 17,184 | 50% | 7% | 53,970 | 36,428 | 48% |
| Attributable to Holding Co. | 17,186 | 11,249 | 15,278 | 53% | 12% | 49,547 | 33,647 | 47% |
| Earnings Per Share (EPS) | 13.3 | 8.7 | 11.8 | – | – | 38.2 | 25.9 | – |
| Dividend Per Share (DPS) | 2.5 | 2.8 | 4.0 | – | – | 11.5 | 24.0 | – |
Disclaimer
The information in this article is based on research by Insight Research. All efforts have been made to ensure the data represented in this article is as per the research report. This report should not be considered investment advice. Readers are encouraged to consult a qualified financial advisor before making any investment decisions.
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