Kapco 1Hcy10 Review

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NPAT increased by 22%YoY

Kot Addu Power Company (KAPCO) has recently announced its result for the period of 1HCY10 where the company posted the NPAT of PKR 2.72 Billion by translating 22%YoY growth comparing to PKR 2.71 Billion during the same period last year. The EPS were PKR 3.09 against PKR 3.08 during the corresponding period last year. The company also declared the cash dividend of PKR 2.25 per share during the period.

PKR-USD Parity remained beneficial

The sales of the company showed a meager increment of 3.66%YoY to PKR 41.11 Billion comparing to PKR 39.66 Billion during the same period last year mainly the back of depreciating PKR-USD Parity during the period which experienced 7.8%YoY on average decline comparing to the same period last year. On the other hand, the increasing production from Furnace oil comparing to gas squeezed the gross profit margins during the period.

Financing cost shrank by 30.72%YoY

The Financing cost of the company nose-dived by 30.72%YoY to PKR 2.15 Billion comparing to PKR 3.10 Billion during the same period last year mainly at the back of ease in interest rates due to the issuance of TFC during the period. Conversely, the other income of the company experienced the decline by 35.83%YoY to PKR 1.39 Billion comparing to PKR 2.17 Billion mainly at the back of lesser interest income on deposits and receivables.

Project Expansion of 280MW

In response to the ongoing liquidity constraints, KAPCO has reshaped its project expansion to 280MW from 450MW. I am not much clear about the impact on earnings as the company has not yet approach the government of Pakistan’s authorities for tariff purpose.

Looking Forward

I currently maintain ‘buy’ stance for the company’s scrip by considering the FY10E earning at 6.23x where my target price for FY10 is PKR 53.45 per share.


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