HUBC - new businesses yielding results

Hub Power Company Limited’s (PSX: HUBC) announced massive increase in consolidated profits for 9MFY23. The growth in earnings came from HUBC’s diversification. The power company does not depend on the base plant at Hub and plant at Narowal; its coal investment, China Power Hub Generation Company under CPEC has been driving profitability since FY20. Then, the company achieved COD for all its Thar-based in the ongoing fiscal year (FY23). Also TEL was commissioned during FY23. Plus, HUBCO’s SECMC project also achieved COD for the second phase during the ongoing year.

HUBC’s revenues during 9MFY23 grew by 26 percent year-on-year, while those in 3QFY23 were up by 45 percent year-on-year. This was due to higher furnace oil prices depreciation of currency and inclusion of TEL plant. The power company witnessed massive jump in gross profits which was due to negligible load factors of its base plant, Hub plant. As per the company, the load factor of Hub plant was only 2.6 percent during 9MFY23. Load factors of CPHCG, TEL and TN (ThalNova) were 15 percent, 52 percent and 61 percent, respectively.

Besides the growth in topline, HUBC’s bottomline also benefitted from share of profits from associated and joint ventures that was up by almost 4 times during 9MFY23. The rise came from higher share of profits from CPHCH, commencement of profits from Thar Energy Limited, ThalNova, and Prime International Oil and Gas Company Limited. After the start of the commercial operations and completion of acquisitions, respectively. What however impacted the bottomline was the higher finance cost – up by 118 percent year-on-year – due to higher interest rates as well as inclusion of TEL’s finance cost.

Overall HUBC’s consolidated earnings were up by 64 percent and in 9MFY23 and by 30 percent in 3QFY23, year-on-year respectively.