Kot Addu Power Company (KAPCO) announced its 2QFY19 financial result where the company posted a profit after tax (PAT) of PKR 5,881mn (EPS: PKR 6.68), up by 166% YoY compared to PKR 2,214mn (EPS: PKR 2.52) during same period last year. The jump in earnings is mainly due to other income on account of tariff true-up during the period. This takes 1HFY19 earnings to PKR 8,996mn (EPS: PKR 10.22) compared to PKR 4,395mn (EPS: PKR 4.99).
Net sales witnessed an increase of 11% YoY to PKR 44,221mn, which is majorly owing to 39% YoY rise in furnace oil prices, however dispatches declined by 25% YoY to 2,616 GWh in 1HFY19. In 2QFY19, sales witnessed a decline of 32% YoY | 60% QoQ due to 65% YoY | 73% QoQ decline in dispatches (551 GWh).
Gross margins remained stable at 16% in 1HFY19, however up by 1,063bps YoY to 28% in 2QFY19. The rise in gross margins was witnessed due to PKR depreciation, we view.
Other income jumped by 248% YoY in 1HFY19 (361% YoY | 138% QoQ in 2QFY19) due to tariff true-up during the period mainly due to currency depreciation of more than 5% during the period under consideration.
Finance cost has increased by 43% YoY (55% YoY in 2QFY19) to PKR 4,400mn due to 16% YoY rise in PSO’s payables in 1HFY19 coupled with higher short term borrowings.
Surprisingly, the company skipped its dividend as overdue receivables of the company went up by 37% YoY to PKR 109bn (as of Sep’18).