Hubco profit jumps, plans to acquire SSGC

Private power producer, Hub Power Co, on Tuesday reported a better-than-expected 13.2 per cent jump in quarterly net profit, an increase analysts said was due to higher plant utilisation.

Hubco’s earnings growth has been constrained by a tariff structure that falls as the company reduces its debts, but future ventures could provide additional upside for dividend payouts, analysts say.

The firm has expressed interest in acquiring a 51 per cent stake in state-run Sui Southern Gas Co Ltd (SSGC), which the government plans to privatise this fiscal year. It also plans to bid for three combined cycle power generation projects.

In its first quarter ended Sept 30, Hubco earned a net profit of Rs722 million ($11.9 million), up from Rs638 million earned a year earlier, it said in a statement. The result was above analysts’ expectations of Rs650-700 million.

Earnings per share during the quarter rose to Rs0.62 from Rs0.55. Dividends are announced with half and full year results.

Analysts said Hubco’s load factor improved in the quarter. Sales almost tripled to Rs11.72 billion from Rs4.07 billion a year ago.

However with prices fixed and input costs offsetting the revenue increase, analysts said earnings growth was limited.

“The profit has most likely stemmed from higher utilisation, leading to improved levels of thermal efficiency,” said Naveed Vakil, analyst at AKD Securities.

Source: The News