This allows EPQL to more fully benefit from the cost efficiency of a combined cycle plant. EPQL posted profit after tax of PkR1.09 billion (EPS: PKR3.36) for 1HCY14, up by 4%YoY. At the same time, interim 1HCY14 dividend stood at PkR1.54/share. On an annualized basis, this translates into an attractive P/E of 6.72 and offering dividend yield of 10% which compared well against a forward P/E of 9.85 for LPL and D/Y of 12% and 12.8% for HUBC and KAPCO, respectively. .
EPQL was set
up under the 2002 Power Policy and operates a 225MW combined cycle, gas and HSD
fired power plant in Qadirpur, Sindh. The Company has a 25-year power purchase
agreement (PPA) with NTDC commencing from Mar 27'10 (COD), and a Fuel Supply
Agreement (FSA) with SNGP/OGDC for running the plant on unsweetened flare gas
(75mmcfd) from the second largest gas field of Pakistan. This is underpinned by
an average load factor of 85% over 2011-13, which improved to 95% in 1QCY14
following turbine repairs in 4QCY13.
EPQL posted
NPAT of PkR1.09 billion (EPS: PkR3.36) for 1HCY14, up by 4%YoY (increase in
other income by PkR148 million YoY). It paid interim dividend of PkR1.54/share for
1HCY14 stood at adding PkR552 million to unappropriated profit).For CY13, EPQL posted net profit of PkR1.01 billion (EPS: PkR4.5), lower by 31%YoY due to a rotor blade fault that shut the plant down for 95 days. That said, the full-year CY13 dividend was PkR6.17/share, following the circular debt repayment last year.
A total of
80.95 million shares are being offered (inclusive of 40.47 million shares under
pre-IPO placement through institutional investors). Priced at PkR30.02/share,
this issue will help in raising an amount of PkR2.43 billion. The purpose of
the issue is ostensibly to pay-off liabilities incurred by EPL for project
financing and finance new projects including the LNG terminal being constructed
by ENGRO subsidiary, Elengy Terminal Pakistan Ltd.
Compared to
Lalpir Power Ltd (LPL), a recently listed IPP of similar capacity, EPQL's
implied valuation multiples at PkR30.02/share. Furthermore, EPQL stacks up well
on payouts as well with a CY14E dividend yield of 10% as compared to a forward
dividend yield of 12% for HUBC and 12.8% for KAPCO. In this regard, HUBC and
KAPCO trade at a forward P/E of 10 and 7.35, respectively. A consistent payout
ratio of 50% (ex-CY13 payout of 137% due to circular debt payment) and a
consistent 31% average ROE over 2011-13 would encourage investors to buy its
shares