Hubco - Financial Analysis

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FINANCIAL ANALYSIS OF HUBCO

A brief Financial Analysis of HUBCO, to determine the possibility of extending exposure on the company.

FINANCIAL SNAPSHOT of HUBCO

COMPANY PROFILE

HUBCO is the second largest Independent Power Project (IPP) in the country and its principal activities are to own, operate and maintain furnace oil based power station situated at a site in Tehsil Hub, in the province of Baluchistan, 40-km from Karachi. Company started its commercial operation in 1997.

The HUB Power Plant consists of 4 generating units each rated at 323 MW gross unit with an oil fired single reheat boiler and tandem compound , two cylinder condensing steam turbines directly coupled to a hydrogen cooled generator.

In the recent years HUBCO has invested in increasing the generation capacity by addition of Narowal Plant. The new plant has a capacity of 1,878 GWh and is located in Mouza Poong, 5 km from Luban Pulli Point on Mureedkay – Narrowal Road, District Narowal, Punjab.

INSTALLED CAPACITY & CAPACITY UTILIZATION

Plant Capacity & Production| 2012| 2011|
Hub Plant|
Theoretical Maximum Output| 10,541 Gwh| 10,512 Gwh|
Total Output| 7,770Gwh| 8,115 Gwh|
Load Factor| 74%| 77%|
Narowal Plant|
Theoretical Maximum Output| 1,878 Gwh| 359 Gwh|
Total Output| 1,321 Gwh| 237 Gwh|
Load Factor| 70%| 66%|
Practical maximum output for the power plant taking into account all the scheduled outages is 1,734 Gwh. Output produced by the plant is dependent on the load demanded by NTDC and the plant availability.|

INDUSTRY OVERVIEW

Pakistan’s electricity infrastructure is being put to the test with power capacity falling short of demand. According to the Private Power and Infrastructure Board of Pakistan (“PPIB”), the current demand is approximately 22,765 MW against a supply of 19,669 MW. Demand/Supply projections made available by PPIB demonstrate that the demand is expected to cross 28,000MWs by 2015 as against the capacity of 24,000MW resulting in a deficit of 3,621MW. However, it should be noted that the industry participants strongly feel that the deficit would be greater than the official version in a backdrop of impaired hydel capacity and scarce gas resources.

Supply and Demand Position: 2008-2015 (MW)|
| 2008| 2009| 2010| 2011| 2012| 2013| 2014| 2015| Existing Generation| 15,903| 15,903| 15,903| 15,903| 15,903| 15,903| 15,903| 15,903| Proposal / Committed Generation| 530| 4,235| 7,226| 10,115| 10,556| 13,307| 13,520| 14,607| Total Existing/Committed Generation| 16,484| 20,138| 23,129| 26,018| 26,459| 29,210| 29,423| 30,510| Expected Available Generation| 13,146| 16,110| 18,503| 20,814| 21,167| 23,368| 23,538| 24,408| Demand (Summer Peak)| 16,484| 17,868| 19,352| 20,874| 22,460| 24,126| 25,919| 28,029| Surplus/Deficit Generation| -3,338| -1,758| -849| -60| -1,293| -758| -2,381| -3,621| Source: Private Power Infrastructure Board|

KEY STATISTICS OF PAKISTAN's POWER SECTOR

FINANCIAL ANALYSIS

INCOME STATEMENT

Turnover for the year amounts to PKR 174.71Bn an increase of 41.69% in comparison to the previous year. The increase in turnover is primarily due to higher fuel oil prices and the Narowal power projects tariff approval also had its share and is expected to have contributed nearly Re.1/share to the bottom line. The Narowal power project successfully completed its first year of operation and the electricity generated was significantly higher than that of the previous year.

Similarly Operating costs have also increased by 39.41% to PKR 159.06 Bn. The main reason being fuel cost soared by 40.1%, from PKR 108Bn to PKR 151.64 Bn.

Operating costs moved in tandem with revenues, yet the gross profit margin...
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