Morning Call about Nishat Chunian Power Limited

Karachi: Nishat Chunian Power Limited is scheduled to announce its FY11 results on 22nd August, 2011.

According to Arif Habib Limited, expects the company to post profit after tax (PAT) of PKR 2.11bn (EPS: PKR 5.75) compared to a loss of PKR 7.7mn (LPS: PKR 0.02) in the corresponding period last year. Efficiency gains, low maintenance cost and penal interest on delayed payments from WAPDA will help the company in achieving this profitability in FY11. During FY11 the plant is expected to operate at a load factor of 86%. Due to rising circular debt issue the company was forced to avail the running facilities in order to run their operations smoothly. The company has to make advance payments to Shell Pakistan for undisrupted fuel supply. The company had declared a dividend of PKR 1.0/share with the announcement of its 3QFY11 results. Arif Habib Limited expects that company will pay a final dividend of PKR 1.0/share taking the full year dividend to PKR 2.0/share.

Recommendation
Arif Habib Limited’s Dividend Discount Model (DDM) based target price for Jun 2012 works out to be PKR 16.19 per share, which offers an upside potential of 19% from closing price of PKR 13.61 per share. Besides attractive upside potential, the stock offers FY11E dividend yield of 14.7%, thus Arif Habib Limited recommends Buy.

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