AZEE Securities Blog : Power Sector Gigantic Growth in 1H

Today we would discuss the performance of the Power sector during the 1HFY15.

Earnings Momentum Continues:

With continuation of gigantic growth of earning in power sector companies during 1QFY15, 2QFY15 too remain impressive for the sector as cumulative earnings of four companies i.e. (HUBC, KAPCO, NCPL, NPL) in our sample size hike by 91% to Rs 7.10 billion as against Rs 3.72 billion. The primary reason that resulted in higher earrings remains lower maintenance cost, efficiency gains, higher production bonus on account of better load factor and rise in other income.

Top Line Modestly Up:

Despite lower furnace oil prices, net sales of the sector remained marginally higher during the period mainly due to hike in load factor as revenue stood at Rs 163.61 billion against Rs 162.27 billion in 1HFY14 depicting increase by 1%. However, operating cost decrease by 3.5% due to lower fuel cost at Rs 142.91 billion compared to Rs 148.06 billon in 1HFY14. Gross profit hike by 46% to Rs 20.70 billion in 1HFY15 versus Rs 14.20 billion in 1HFY14.

Impressive Dividend Payout:

All the four companies have announced cash dividends for its shareholders along with corporate results. During the 2QFY15, Hub Power announced a cash dividend of Rs 4/share and Kot Adu Power Company by Rs 4/share. Similarly, Nishat Power announce first and second interim dividend of Rs1/share, Rs1.75/share totaling Rs 2.75/share in 1HFY15 against Rs 2/share in 1HFY14. Furthermore, Nishat Chunian Power announced Rs 2/share in 2QFY15 and Rs 1.5/share in 1QFY15 adding to Rs 3.5/share against previous year same period of Rs 3/share in 1HFY14.

KAPCO & HUBCO on Top Position:

Kapco and Hubco posted gigantic growth in earnings by 70% & 61.5% with PAT of Rs 4.83 billion (EPS: Rs 5.49) and Rs 4.74 billion (EPS: Rs 4.10) respectively. Similarly, NPL and NCPL too showed decent growth of 42.5% and 36% respectively in 1H-FY15.