NCPL in suffering

Like Nishat Power Limited (KSE:NPL), Nishat Chunian Power Limited's (KSE:NCPL) financial performance took the opposite turn to what the market had been anticipating. Where the market was expecting the decreased fuel saving to drag NPLs earnings in 1HFY15, higher penal mark-up income was expected to push earnings for NCPL up.
However, the Nishat Chunian Power Limited's bottom line witnessed a decline of 74 percent year -on-year in 1HFY15. With a five percent year-on-year increase in revenues, the firms gross margin shrunk in 1HFY15 to 8.47 percent from 11.35 percent in 1HFY14 due to a non-proportional increase in the cost of sales. This was due to the decline in fuel savings amid falling crude oil prices.
Apart from the decrease in gross profits, the IPPs bottom line was also affected adversely by a drop in other income; penal mark-up income slipped by 40 percent year-on-year in 1HFY15 due to decrease in net benefit on circular debt exposure. Meanwhile, the firm's finance cost can also be seen to have increased as circular debt starts piling up again.
In near future, the profitability of the firm will remain under pressure from reduced fuel savings and operations and maintenance activities in the ongoing year.

================================================================================

Nishat Chunian Power Limited (NCPL)

================================================================================

Rs (mn)                   1HFY15   1HFY14       YoY   2QFY15    2QFY14       YoY

================================================================================

Sales                     11,301   10,611      6.5%    5,991     5,445     10.0%

Gross profit                 957    1,205    -20.6%      551       498     10.5%

Distribution expenses        360      297     21.3%      204       143     43.2%

Administrative expenses       92       76     20.5%       52        46     12.9%

Other  expenses               45       89    -50.0%       43        54    -19.2%

Other income                 686    1,153    -40.4%      774     1,070    -27.7%

Finance cost                 691      621     11.1%      382       327     16.7%

Profit after tax             325    1,267    -74.3%      564     1,043    -45.9%

EPS (Rs/share)              1.63     6.33    -74.2%     2.82      5.21    -45.9%

Gross margin               8.47%   11.35%              9.19%     9.15%

Net margin                 2.88%   11.94%              9.41%    19.15%

================================================================================