Hub Power Company Limited (HUBC) - February 2023

Hub Power Company Limited (HUBC) – February 2023

Research Team

Table of Contents

Corporate Briefing Notes

The Hub Power Company Limited (HUBC) organized a corporate briefing session today and discussed the financial performance and future outlook of the Company.

The key takeaways from the meeting are as follows:

Key Highlights

● With a total power capacity of 3,581 MW, the Company reduced the reliance on imported coal which helped significantly reduce the total cost and save the foreign exchange.

● As a major breakthrough, the Company successfully achieved the COD for all the three Thar-based projects in the period under review.

● The Thar Energy Limited project (330 MW) and The Nova project (330MW) are expected to rank among the top five in merit order.

● With 60% share in the Thar Energy project and 38.3% in Thal Nova project, the Company expects an ROE of 30.65% from these projects. The COD was achieved in October 2022.

● For SECMC, HUBC successfully achieved COD for Phase II that will double the mining capacity from 3.8 MTPA to 7.2 MTPA. Currently, the Company holds 8% stake in this joint venture.

● Besides, the Company informed about diversifying their portfolio made possible with the acquisition of ENI Pakistan’ E&P Business which will reduce the coal prices and increased reliance on indigenous energy sources.

● China Power Hub Generation Company (CPHGC) project was completed in February, 2023 followed by the release of the $150 million Standby Letter of credit (SBLC). With 46% stake, HUBC expects an ROE of 27.2% as per upfront tariff.

● Due to the transformer failure in July, 2021 at CPHGC, the availability was reduced from 85% to 45%. However, it was resumed in January, 2022.

● Company management also informed about the insurance claims of $65 million against the transformer damage.

● The consolidated performance of the Company remained solid with revenue growth of 18%, gross profit by 43%, EBITDA by 41%. Net profit by 43% and EPS of 84%.

● Company attributed the higher profit to the CPHGC due to devaluation and insurance claims. On the other hand, the higher finance cost was due to the higher interest rates and depreciation of PKR.

Future Outlook

HUBC management also discussed the future strategy and prospects that have been
underlined below:

Key Highlights

● HUBC is looking forward to participating in the bidding process after the Sindh government announcement for the wastewater recycling project.

● To diversify their portfolio, the Company is likely to further explore and evaluate the opportunities and prospects for the Electric Vehicles in Pakistan after the market is back on track.

Important Disclosures


This report has been prepared by Chase Securities Pakistan (Private) Limited and is provided for information purposes only. Under no circumstances, this is to be used or considered as an offer to sell or solicitation or any offer to buy. While reasonable care has been taken to ensure that the information contained in this report is not untrue or misleading at the time of its publication, Chase Securities makes no representation as to its accuracy or completeness and it should not be relied upon as such. From time to time, Chase Securities and/or any of its officers or directors may, as permitted by applicable laws, have a position, or otherwise be interested in any transaction, in any securities directly or indirectly subject of this report Chase Securities as a firm may have business relationships, including investment banking relationships with the companies referred to in this report This report is provided only for the information of professional advisers who are expected to make their own investment decisions without undue reliance on this report and Chase Securities accepts no responsibility whatsoever for any direct or indirect consequential loss arising from any use of this report or its contents At the same time, it should be noted that investments in capital markets are also subject to market risks This report may not be reproduced, distributed or published by any recipient for any purpose.

Analyst certification:

The research analyst for this report, Rashida Fazal, certifies that 1. all of the views expressed in this report accurately reflect her personal views about the subject and 2. no part of any of the research analyst’s compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the research analyst in this report.

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