HUBCO profit rises 18 percent to Rs26.060 million

KARACHI: Hub Power Company Limited (HUBCO) registered an increase of 18 percent in its profit to reach Rs26.060 million for the period ended June 30, 2020, translating into an EPS of Rs19.31, a bourse filing said on Wednesday.

The company earned Rs11.930 million with the EPS of Rs9.37 in the corresponding period last year. HUBCO did not announced any final cash dividend for the half year ended June 30, 2020.

Brokerage Topline Securities in a research note said: “The earnings came lower-than-industry expectations due to higher-than-expected tax expense in 4QFY20.”

Moreover, turnover declined 13 percent YoY to Rs11,848 million in 4QFY20, amid zero generation from Hub plant and lower generation from Narowal plant, as the government focused on producing power from cheaper and efficient sources.

Share of profit from associate increased to Rs4,740 million, compared with the loss of Rs113 million, amid contribution from coal plants; mainly China Hub Power Company (CPHGC). The company booked a tax expense of Rs3,274 million (effective tax rate 31 percent) in 4QFY20, compared with the Rs231 million (effective tax rate 7 percent) in the same period of the last year.

Brokerage Arif Habib Limited in their research note said: “The company booked Rs3,274 million in taxation (effective tax rate 31 percent) during 4QFY20, compared with Rs231 million (effective tax rate 7 percent) during 4QFY19.

Further, recognition of deferred tax on share of profit from CPHGC augmented the tax charge in consolidated financial statements, the brokerage house added.

Engro Corporation half-year profit up 36pc

Engro Corporation Limited profit rose 36 percent to Rs15.528 million for the half-year ended June 30, 2020, translating into the EPS of Rs15.73.

The company earned Rs11.363 million with EPS of Rs11.82 in the corresponding period last year. It announced an interim cash dividend of Rs8/share for the quarter ended June 30, 2020, which is equivalent to 80 percent.

This is in addition to the interim cash dividend already paid at Rs6/share or 60 percent.

Brokerage Topline Securities in a research note said: “Engro Fertilizer Limited (EFERT) earnings were up 22 percent YoY to Rs3,886 million during 2Q2020 due to higher urea sales by 52 percent YoY to 696k tons.”

However, Engro Polymer (EPCL) earnings were down 93 percent YoY to Rs30 million, compared with Rs452 million in 2Q2019 due to decline in PVC and caustic sales, amid country-wide lockdown due to COVID-19 outbreak and decline in gross margins by 12.1ppts to 9.8 percent, the brokerage house added.

Other income decreased 12 percent YoY to Rs3,576 million, while other operating expenses increased 13 percent YoY to Rs2,051 million.

Brokerage Arif Habib Limited in their research note said: "Engro Powergen Qadirpur (EPQL) clocked-in at Rs414 million (EPS: Rs1.28) in 2QCY20, compared with Rs1,154 million (EPS: Rs3.57) in SPLY, down 64 percent YoY given decline in gross margins to 21.6 percent YoY, compared with 32.4 percent in SPLY.

This took the net profit in 1HCY20 to Rs1,310 million (EPS: Rs4.04), down 30 percent YoY, the brokerage house added.

We expect a profit of Rs2,570 million and Rs633 million from Thar business (EPTL and SECMC) and Elengy business, respectively.

Pak Suzuki declares half-yearly loss of Rs2.462mln

Pakistan Suzuki Motor Company Limited declared a loss-after-tax of Rs2.462 million for the half-year period ended June 30, 2020, translating into LPS of Rs29.92.

The company witnessed a loss of Rs1.525 million with LPS of Rs18.53 in the corresponding period last year. The company didn't announced any final cash dividend for the period under review. Brokerage Topline Securities in a research note said: “The company’s revenues declined by 58 percent YoY in 1H2020, mainly attributable to 68 percent YoY fall in unit sales. The unit sales were down 45 percent QoQ to 7,512 units in 2Q2020.”

The demand for new cars remained depressed throughout 1H2020, amid high car prices and negative impact of COIVD-19 on consumer buying, the brokerage house added.

Brokerage Arif Habib Limited in their research note said: “Net sales of the company dropped 69 percent YoY to Rs9.7 billion in 2QCY20, compared with Rs31 billion in 2QCY19 due to closure of plant and dealership network, resulting in total volumetric decline of 75 percent YoY and 45 percent QoQ to 7,512 units.

Gross margins turned negative to 6.29 percent, down 729bps YoY and 952bps QoQ, compared with one percent in 2QCY19 and 3.23 percent in 1QCY20, respectively.

The decline came on account of currency depreciation and higher fixed cost per unit, the brokerage house added.

Other income increased 166 percent YoY and 163 percent QoQ to Rs141 million.

Finance costs of the company jumped up 133 percent YoY to Rs886 million owing to rise in borrowings to meet working capital requirements. The company recorded a tax reversal of Rs551 million in 2QCY20, compared with the tax reversal of Rs1,053 million during the same period last year.

JS Bank research report said: “The company has been facing severe pressure on both volumes and margins ever since the devaluation spree began, despite numerous price increases to offset the cost impact.”

Unfortunately, with the increasing competition from Korean and Chinese assemblers, the options are limited for the automaker, with a highly challenging environment, going forward, the report said.