NCPL stock price declines

The stock price of Nishat Chunian Power Limited (NCPL) has declined by 17.84 per cent since 1st January 2011, despite of the fact that company paid a dividend of Rs2.0/share in FY11. We expect company’s earnings will stand at Rs2.2bn (EPS: 6.05/share) in FY12 and it will pay a dividend of Rs2.5/share translating into a dividend yield of 18.9 per cent, said Usman Saeed at AHL.
In 1QFY12, NCPL posted a profit after tax of Rs580mn (EPS: Rs1.58) as compared to Rs418mn (EPS: Rs1.14) in 1QFY11, depicting an increase of 39 per cent YoY. This jump in earnings was mainly due to the high fuel savings, lower maintenance cost and high penal interest income, earned during the quarter. Due to non availability of Furnace Oil (FO), on the back of cash constraints, the load factor of the plant remained lower in 1QFY12. The plant was operated at a load factor of 78.65 per cent and generated 340Gwh of electricity. In 1QFY12, fuel savings contributed to the tune of Rs0.23/share, at an assumed thermal efficiency of 46.3 per cent. At the given thermal efficiency level, we believe the company will have fuel saving of Rs491mn (Rs1.34/share) in FY12, he added. In 1QFY12, NCPL’s receivables from National Transmission and Distribution Company (NTDC) reached to Rs9.1bn, on which overdue receivables stood at Rs6.2bn whereas, short term borrowing also increased by 56 per cent to Rs5.62bn. Higher receivables resulted in penal income of Rs190mn while, positive spread on circular debt resulted in net impact of Rs0.30/share. He said going forward we expect with the increase in FO prices, the company will witness fuel savings and higher penal interest income which will also support the bottom line in FY12. In 2QFY12, we expect the company to post earnings of Rs547.56mn (EPS: Rs1.49/share) on the back of growing indexation (USD/PKR parity) factors, coupled with efficiency gains and penal interest income, he added.