IGI Securities Limited – Flash Note

Karachi, February 23, 2018 (PPI-OT): Power Generation and Distribution – KAPCO: Lower fuel losses and PKR depreciation lifts 2QFY18 EPS to PKR 2.52 in 2QFY18

Kot Addu Power Company Limited (KAPCO) its announced financial results for 2QFY18 with earnings clocking in at PKR 2.21bn (EPS PKR 2.52) up by +19%YoY compared to PKR 1.85bn (EPS PKR 2.11) in the same period last year. This brings cumulative earnings for 1HFY18 to PKR 4.40bn (EPS PKR 5.00) up by +5%YoY compared to PKR 4.17bn (EPS PKR 4.74) in the corresponding period last year.

The company announced cash dividend of PKR 4.35/share along with the result.

Revenues for 2QFY18 increased by +21%YoY to PKR 18.45bn as compared to PKR 15.19bn in the corresponding period last year owing to +21%YoY rise in FO prices, higher load factor of 55% and 2%YoY PKR depreciation.

Gross margins declined by 14bps to 17.4% during 2QFY18 as compared to 17.3% in the corresponding period last year likely owing to lower repairs and maintenance cost and PKR depreciation of 2%.

Admin expenses declined by 12%YoY to PKR 101mn during 2QFY18 compared to PKR 115mn in the same period last year.

Finance costs leaped up by +47%YoY to PKR 1.49bn during 2QFY18 as compared to PKR 1.01bn in the corresponding period last year likely owing to heavy reliance on short term borrowings.

Effective tax rate dropped to 29.5% during 2QFY18 compared to 31.9% in the corresponding period last year.

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