Hub Power Co. Ltd. · PSX:HUBC
Hub Power — The Hub Power Company — Investor Presentation (September 2021)
38 slides from Hub Power's investor presentation, September 2021
Slide 1: The Hub Power Company Limited Investor Presentation September 2021
THE HUB POWER COMPANY LIMITED INVESTOR PRESENTATION SEPTEMBER 2021 IR Officer: Umer Shahzad Contact number: 03018294671 Email address: umer.shahzad@hubpower.com
Slide 2: Table of Contents
TABLE OF CONTENTS INTRODUCTION • Company snapshot • Investment case CORPORATE OVERVIEW BUSINESS OVERVIEW GROWTH DRIVERS FINANCIAL OVERVIEW
Slide 3: Company Snapshot
Company Snapshot Hubco runs regular CSR programs in the fields of: Corporate Revenue Net Profit No. of Employees Footprint Education Livelihood Philanthropy 54,639 33,688 744 95 PKR M PKR M Health Infrastructure PKR Million ⚫ With a strong footprint established over the years, Hubco is the first and
Slide 4: Investment case
Investment case Stable returns based on capacity payments from long-term offtake agreements Strong historical earnings Tremendous earnings growth potential from investments in new large projects in power and mining Strong technical capabilities developed over two decades Future growth strategy targe
Slide 5: Table of Contents
TABLE OF CONTENTS INTRODUCTION CORPORATE OVERVIEW • Milestones • Corporate structure • Board of directors • Management team • Shareholder structure • Capital raising, buyback and M&A history BUSINESS OVERVIEW GROWTH DRIVERS FINANCIAL OVERVIEW
Slide 6: Milestones
Milestones Growth projects: Government of ENI Pakistan 1. COD of SECMC Phase I Pakistan and All upstream 2. Financial close of SECMC Phase II World Bank operations and 3. Acquired 38.3% equity stake and developed a The Hub Power Company renewable energy management control in ThalNova strategy for Li
Slide 7: Capital Structure
Capital Structure The Hub Power Company Limited 75% 100% 100% 100% 60% 8% Laraib Energy Narowal Energy Hub Power Hub Power Thar Energy Sindh Engro Coal Limited Limited Services Limited Holdings Limited Limited Mining Company (LEL) (NEL) (HPSL) (HPHL) (TEL) (SECMC) COD Q1 2022 *46% **50% 38% China Po
Slide 8: Board of Directors
Board of Directors M. Habibullah Khan Kamran Kamal Aly Khan Aleeya Khan Chairman Director and CEO Director Director Shafiuddin Ghani Khan Manzoor Ahmed Ejaz Sanjrani Director Director Director Saad Iqbal Nadeem Inayat Director Director The Hub Power Company Limited 8
Slide 9: Leadership Team
Leadership Team Kamran Abdul Farrukh Saleemullah Kamal Nasir Rasheed Memon CEO HUBCO CFO VP HR & Digitization CEO TEL & ThalNova Energy technology and Seasoned finance Has over 15 years of Worked with Engro policy specialist with executive with an excellent experience in the areas of Corporation for
Slide 10: Shareholder structure
Shareholder structure Shareholder No. of shares (m) % ownership Commitment to minority shareholders Mega Conglomerate 253 19.5 We are committed to creating value for minority shareholders and acting in their best interests through: Fauji Foundation 110 8.5 Allied Bank 57 4.4 Strong corporate governa
Slide 11: Capital raising, buyback, and M&A history
Capital raising, buyback, and M&A history Year Transaction 1994 IPO of Hubco 2008 Acquisition of 74.95% controlling equity stake in Laraib Energy Limited 2017 Demerger of Narowal Plant into Narowal Energy Limited, a wholly owned subsidiary of Hubco 2019 Acquisition of 38.3% controlling stake in Thal
Slide 12: Table of Contents
TABLE OF CONTENTS INTRODUCTION CORPORATE OVERVIEW BUSINESS OVERVIEW • Business model and strategy • Project portfolio and geographic footprint • Operating plants • ESG & Sustainability • UN Sustainable Development Goals • Risk management • ESG awards and recognition • COVID-19 precautions • COVID-19
Slide 13: Business model and strategy
Business model and strategy Long-term offtake contracts generate revenue and cash flows at contracted rates over a period of decades Power Generation ▪ IPP’s revenues are based on a two-tier tariff designed on recovery of costs, debt servicing and return on capital 15-20% USD ▪ 2,921 MW in operation
Slide 14: Project portfolio and geographic footprint
Project portfolio and geographic footprint Project Category Name Capacity COD cost ($) 1 Furnace Oil Hub 1,292 MW 1,600 m 1997 2 Furnace Oil Narowal 225 MW 270 m 2011 3 Hydro Laraib 84 MW 220 m 2013 4 Imported Coal CPHGC 1320 MW 1,995 m 2019 The Hub Power Company Limited 14
Slide 15: Operating Plants
Operating Plants Hub Plant Narowal Plant Sponsors Hubco Sponsors Hubco Project cost US$ 1,600 MN Project cost US$ 270 MN Scope 4x323 (1,292MW) Gross Gross Capacity 224.79 MW (Reciprocating Engines Scope 11x18.4 and Steam Turbine 1x16.5) Location Mouza Kund, Lasbela, Baluchistan Mouza Poong, Mureedka
Slide 16: Operating Plants
Operating Plants Laraib Energy Limited (LEL) China Power Hub Generation Company (CPHGC) Sponsors Hubco JV of China Power International Holdings (CPIH) and Sponsors Hubco Lender ADB, IDB, IFC, Proparco, NBP and HBL Lender Bank consortium led by China Development Bank (CDB) Equity ratio 25:75 CPIH (vi
Slide 17: ESG & Sustainability
ESG & Sustainability Environment Social Governance • Our 84 MW New Bong Escape Hydropower • Hubco is committed to operate within ethical • Compliance with the Best Practices of Code of Project, Laraib Energy, is registered under CDM framework and contribute to the socio-economic Corporate Governance
Slide 18: UN Sustainable Development Goals
UN Sustainable Development Goals HUBCO’s CSR strategy incorporates several goals consistent with the UN SDGs: ▪ Free medical camps are provided by ▪ HUBCO has established numerous ▪ HUBCO works with a local ▪ HUBCO has installed a ▪ HUBCO strictly HUBCO for local communities. Each schools in partner
Slide 19: Risk management
Risk management ▪ Regular advocacy through different forums such as IPPAC, Pakistan Business Council, OICCI, etc. to timely apprise the relevant Government departments and Regulators of all issues that may have an adverse impact on the Industry. ▪ To mitigate the operational risks, necessary strateg
Slide 20: ESG awards and recognition
ESG awards and recognition Awards and recognition ▪ Certificate of Merit awarded by Institute of Chartered Accountants of Pakistan for Best Corporate Report, 2020 ▪ Gender Diversity at Workplace Award by the CFA Society Pakistan’s 17th Corporate Excellence Award, 2020 ▪ Notable Growth in Women Empow
Slide 21: Table of Contents
TABLE OF CONTENTS INTRODUCTION CORPORATE OVERVIEW BUSINESS OVERVIEW GROWTH DRIVERS • Macroeconomic and industry trends • Supportive investment landscape • Investment projects • Partnerships and joint ventures • Market share and competitive advantages • Future Growth Strategy FINANCIAL OVERVIEW
Slide 22: Macroeconomic trends
Macroeconomic trends Country overview Significant progress in recent months Positive outlook as macroeconomic conditions improve and structural Demographics (in mil) FY 21 Macro data FY 21 reforms in fiscal management and competitiveness take effect Area (km2) 796,095 GDP growth 3.9% Population 217
Slide 23: Industry trends
Industry trends Over 10,000 MW of power generation has been added in the last 3 years; however, overall energy planning in the industry remained fragmented across the energy value chain, with little focus on reducing losses and upgrading Transmission and Distribution capacity Peak Demand vs Peak Sup
Slide 24: Supportive investment landscape
Supportive investment landscape Per-capita electricity consumption in Pakistan stood at 448 KWh against a global average of 3,132 KWh in 2014 (World Bank). 29% of the population in a country with the world’s 6th-largest population did not have access to electricity in 2017. ▪ The government committe
Slide 25: Investment projects
Investment projects COD / Category Name Capacity Project cost ($) Acquisition 1 Thar Coal Thar Energy 330 MW 520 MN 2022(E) 2 Thar Coal ThalNova 330 MW 527 MN 2022(E) 3 Coal Mining SECMC 15 MTPA 1,259 MN 2019* 4 E&P ENI (Prime) 13.8 MM boe N/A 2021 *Phase I of 3.8 MTPA (E) = Expected y x The Hub
Slide 26: Investment projects
Investment projects Thar Energy Limited ThalNova Power Thar (Pvt.) Limited Sponsors JV of Hubco, Fauji Fertilizer Company (FFC) and China Sponsors JV of Hubco, House of Habib (HoH), CMEC and Descon Machinery Engineering Corporation (CMEC) Lender Bank consortium led by CDB and HBL Lender Bank consort
Slide 27: Investment projects
Investment projects Sindh Engro Coal Mining Company (SECMC) ENI Pakistan Public-Private Partnership between the Gov’t of Sindh Sponsors Joint Venture between HPHL and ENI Pakistan Local Sponsors and Private Sector (Engro, Thal Limited, HBL, Hubco, Employees (Prime International Oil Gas Company Ltd.)
Slide 28: Partnerships and joint ventures
Partnerships and joint ventures Indirect Lender and Guarantor of Hub Power Plant Joint Venture Partner and Co-Sponsor for 2x660 MW Imported Coal-based Solicitation of support from governments of France, Italy, Japan, the United Kingdom and Power Plant at Hub the United States for financing of the Pr
Slide 29: Market share and competitive advantages
Market share and competitive advantages Market share Unique competitive advantages Hub Power Co ▪ Strategic location at Hub Others ▪ Footprint across the entire country 8% ▪ Diversification into different fuels / renewables ▪ Imported coal Based on Installed ▪ Local coal Capacity ▪ Hydro ▪ Self O&M
Slide 30: Hubco's Future Growth Strategy: A Shift to Green Energy
HUBCO’S FUTURE GROWTH STRATEGY A SHIFT TO GREEN ENERGY • Pakistan’s total solar and wind potential is 2.9 Million MW and 132 GW respectively • The new energy policy aims to increase the share of renewables in the energy mix of Pakistan to 30% by the year 2030 • Hubco plans to shift its portfolio’s f
Slide 31: Hubco's Future Growth Strategy: Water Solutions
Karachi’s Current Water Situation HUBCO’S FUTURE GROWTH STRATEGY 1,100 MIGD Karachi’s demand for water for over 20 million people WATER SOLUTIONS • Despite having the world’s largest glaciers, Pakistan is world’s 36th most water stressed 550 MIGD country Karachi’s current water shortfall • Water ava
Slide 32: Table of Contents
TABLE OF CONTENTS INTRODUCTION CORPORATE OVERVIEW BUSINESS OVERVIEW GROWTH DRIVERS FINANCIAL OVERVIEW • Key financial data • Segment financials • Balance sheet summary and key financial ratios • Capital structure / debt • Earnings guidance
Slide 33: Key financial data
Key financial data Revenue (PKR b) Net profit (PKR b) 45,000 80% 101 100 40,000 35,000 62% 52% 60% 30,000 59 25,000 72 70 55 40% 48 20,000 11 19% 23 6 15,000 11% 11% 20% 10,000 42 44 0% 29 30 36 5,000 11 11 11 25 34 - -20% 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 CPP EPP ▪ The decrease in t
Slide 34: Segment financials
Segment financials Revenue1 (PKR b) Revenue1 breakdown O&M Laraib plant 13% 36 32 28 Hub plant 16 15 2021 14 27% 58% 6 7 7 Narowal plant 2 1 1 Hub plant Narowal plant Laraib plant O&M 2019 2020 2021 Gross profit1 (PKR b) 18 Net profit1 (PKR b) 20 18 14 12 9 7 7 6 5 5 5 5 5 4 4 4 3 0.7 0.6 0.2 0.3 0.
Slide 35: Balance sheet summary and key financial ratios
Balance sheet summary and key financial ratios Balance sheet (PKR m) Key financial ratios Fiscal year 2017 2018 2019 2020 2021 Fiscal year 2017 2018 2019 2020 2021 Long-term investments 11,174 20,679 48,355 56,549 57,295 Profitability ratios Net Profit margin 10.5% 11.2% 22.2% 36.9% 66.4% Trade debt
Slide 36: Capital structure / debt
Capital structure / debt Capital structure ratios Fiscal year 2017 2018 2019 2020 2021 Financial leverage ratio 0.4x 0.7x 0.7x 0.8x 0.6x Weighted-average cost of debt 5.5% 7.0% 9.9% 14.6% 9.1% Debt-to-equity ratio 29:71 42:58 42:58 45:55 39:61 Interest coverage ratio 5.7x 4.9x 2.7x 2.1x 4.9x ▪ Hubco
Slide 37: Earnings guidance
Earnings guidance ▪ Power generation is a highly regulated sector in Pakistan and therefore Hubco’s earnings are not subject to volatility due to market uncertainty ▪ Recently announced results for FY 2020-21 incorporate the earnings from base business and CPHGC which are expected to remain stable ▪
Slide 38: Thank you
THE HUB POWER COMPANY LIMITED THANK YOU IR Officer: Umer Shahzad Contact number: 03018294671 Email address: umer.shahzad@hubpower.com
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