04 September 2004	Saturday	18 Rajab 1425

KARACHI, Sept 3: Equity analysts in Pakistan have perhaps come of age. As far as their anticipations about after tax profit and the final dividend to be declared by Pakistan's largest private power plant (Hubco) were concerned, most of them hit the bulls' eye.

The meeting of the board of directors of Hubco was held in London on Thursday and due the timing difference, the financial figures and dividend could be announced at the Karachi Stock Exchange on Friday.

A sample of some half a dozen brokerage firms: Arif Habib Securities; First Capital Equities; Invest Capital Securities; Jahangir Siddiqui Capital Markets; the KASB and Capital One Equities showed that the projections of expected earnings for the financial year ended June 30, 2004 and the quantum of final dividend came generally close to the declared numbers.

Every analyst, for example expected lower than last year's net earnings of Rs6.1 billion. And almost all of them had flashed the figure of Rs5.5 billion. The actual numbers released by the company showed that profit after tax was just that: Rs5.5 billion.

The expectations for final dividend had ranged between Rs1.50 to Rs1.70. That settled between the average of the two at Rs1.60 a share. Without trying to rob the analysts of the credit that is their due, as an aside, it may also be whispered that figuring out Hubco's possible financial outcome for the year 2004, was all too easy.

At the stock exchange the Hubco stock traded and closed at the overnight value of Rs31.05; the results and dividend having already factored into the stock price. Volume was 6.5 million shares. The earning per share for the year under review worked out at Rs4.72.

The final cash dividend now recommended by the Board is in addition to the interim at Rs1.60, already paid on April 28, 2004. On the current price, the price-to-earnings (p/e) ratio worked out at 6.6x, which was at substantial discount to the market P/e of 11x.

The stock is giving a double digit cash yield, which is higher than most fixed income securities. The share has, nonetheless, under performed the stock market. From January this year, the price of share in Hubco has dropped by more than Rs7, or 20 per cent, which is quite the opposite of the KSE-100 index which has risen by an equal percentage. The company has called the annual general meeting on Oct 13 at Islamabad.

Turnover for the year ended June 30, 2004 stood at Rs16.0 billion, compared with Rs19.5 billion the year ago. Gross profit decreased to Rs7.9 billion, from Rs8.5 billion in FY03.

Directors explained in their report that both the turnover and operating costs had registered a decrease compared to the previous year mainly due to a decrease in the load factor which was 16 per cent, compared to 26 per cent the previous year and a reduction in fuel oil price.

Hubco did well to issue the chairman's review, director's report and about the entire annual report with the figures released on Friday. Chairman Mohamed A.Alireza stated in his report that the company had passed through the current and the preceding year with relatively low dispatch demanded by Wapda.

"Now that electricity demand is increasing in Pakistan we are anticipating a much better dispatch in the years to come", said the Hubco chairman, adding that the Hubco team continued to work harmoniously with Wapda.

The chairman observed that anticipating that in July 2005, the company was scheduled to make the final payment of its senior debt and, in line with the company's strategy for future development in Pakistan, the company had responded to the 2002 Power Policy of the government by submitting the Letters of Intent for power projects near Karachi.

"We now await further direction from the government especially on matters relating to local fuel availability and tariffs, and look forward to creating an attractive and bankable investment opportunity", said the company chairman.

He informed that according to earlier plans and to maintain high availability of the Hub Power plant, the remaining two high risk Coemsa Generator transformers had been replaced during the year with new technology Toshiba Generator Transformers.

The company was also said to have signed contracts with Ansaldo to procure a complete set of turbine blades that was now in manufacturing and would be available during the next fiscal year.

The Hubco boss confirmed that the repair work on Unit No.4 Generator was in progress. Ansaldo, the original equipment manufacturer were carrying out the repair in conjunction with the company's O&M Operators and had advised a return to service by end September 2004.