- NEPRA notified HUBC’s post COD tariff determination last week, and approved a final tariff of PKR 15.6589 per kWh. The release of the tariff determination clears ambiguity that surrounded the Narowal Project as HUBC’s international sponsors exited the project whilst pending status of final tariff determination had created doubts in investors’ minds as to the fate of the expansion.
- Based on the new tariff, HUBC’s FY12 earnings are likely to be revised up by PKR 1.03 per share. Our FY12 earnings prior to the release of Narowal’s post COD tariff determination were PKR 5.85 per share. Hence we revise our FY12 earnings to PKR 6.88 per share. We however maintain our dividend payout at PKR 6 per share for FY12 because of the settlement of the withholding tax issue.
- HUBC decided to pay PKR 1.6bn to FBR to settle the long standing tax issue, which has caused a cash outflow to the tune of PKR 1.38 per share during FY12. However, as the case is still pending in court, the company is unlikely to take any charge on its income statement as the company is confident that the decision will be in their favor.
- For long term investors, the stock still offers an implied project IRR of 19.2%. Moreover, our Dec12 PT for HUBC of PKR 55 per share reveals an upside of 34% from current levels. In addition, HUBC is trading at FY13 PE of 6.0x, and offers a dividend yield of 15.6% at current levels. The Narowal expansion contributes PKR 1.40 per share to FY13 EPS and PKR 7 per share to HUBC’s Dec12 PT.
No comments:
Post a Comment