IGI Securities Limited – Day Break

Karachi, September 25, 2018 (PPI-OT): Power Generation and Distribution – Aug-18: Generation up by +10%YoY; Depressed FO generation despite historic peak level

As per latest data available on NEPRA’s website, overall power generation during the month of Jul-18 surged by +10%YoY to 14,017Gwh. Power production through Coal/Gas-LNG clocked in at 1,344/5,227Gwh up by +3.3x/+49%YoY, while generation through FO decreased by 47%YoY to 1,644Gwh during Aug-18,

Power generation through RFO in Aug-18 dropped by 47%YoY (down by 1,479Gwh) to 1,644Gwh, owing to lower generation from GENCO I and III and KAPCO Block I and II (cumulatively down by 907Gwh), lower generation from smaller IPPs (down by 136Gwh) and drop in generation from Hub plant (down by 70%YoY or 439Gwh),

Gas/LNG based power generation augmented by +49%YoY (+1,712Gwh) to 5,227Gwh in Aug-18 on the back of a) resumption of production from Orient, Saif, Saphire and Halmore cumulatively adding 535Gwh, b) higher generation through gas by KAPCO Block I, II and III cumulatively adding 385Gwh and, c) +5.3x/+75%YoY higher production from Haveli Bahadur Shah/QATPL (up by cumulative +872Gwh),

We maintain HUBC as our top pick with our Dec-18 target price of PKR 139.1/share offering +46% upside from its last close. We also have a ‘BUY’ stance on KAPCO with our Dec-18 target price of PKR 68.7/share offering +20% upside from last close.

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