NCPL was established in 2007 as a power generation project with a 25 year take or pay agreement with National Transmission & Dispatch Company (NTDC). The plant started its commercial operations on July 21, 2010. The power plant is a 200 MW RFO with a net output of 195 MWh.
Historical performance NCPL has had declining revenues for the past two years, which can be attributed to the decrease in furnace oil prices. However, another factor was a lower capacity factor which has gone down from 82.5 percent in FY15 to 70 percent in 2016. This was due to lower demand from the purchaser NTDC probably because of the merit order which essentially means cheaper generation is given preference by the central purchaser. However, NCPL blames NTDC for this lower capacity factor which it cites to non-availability of fuel because of non-payment of dues by NTDC.
It is also pertinent to mention that for power plants the maintenance expenditure is higher in the later years. Which means that in the initial year's profit will be relatively higher. Thereby, NCPL would naturally witness a decrease in profitability in the later years due to higher O&M and maintenance costs.
However, profitability margins of NCPL have been increasing in the past two years with gross margins improving from 18 percent in FY14 to 30 percent in FY16. Similarly, net margins also doubled from10 percent in FY14 to 20 percent in FY16. The company has been earning an ROE of nearly 40 percent during the past three years. But the liquidity position of NCPL has been deteriorating with the current ratio in FY16 at 1.29. The company noted in its director report for FY16 that as of June 30, 2016 total receivables from NTDC have increased to Rs 6.4 billion out of which Rs 3.8 billion were overdue.
Snapshot 9MFY17 There was only a marginal increase in revenue during 9MFY17 as compared to the previous year while NCPL clocked in a lower profit after tax for the period as well. The EPS was Rs 5.81 for 9MFY17 as compared to the corresponding period in the previous year. On the operational side plant availability was 93.2 percent with a capacity factor of 74.6 percent for 9MFY17.
As has been the case for the majority of IPPs, NCPL has also been facing the consequences of rising circular debt. According to NCPL's director's report for the previous quarter total receivables were Rs 9.35 billion out of which Rs 6.13 billion were overdue by the end of March, 2017.
Stock performance and shareholding pattern NCPL started the year at par with the benchmark KSE-100 and closely trailed it till September, 2016. However, it has been on a downward trajectory since with the deviation from the benchmark widening by a broad margin. The year has been lacklustre for power generation company stocks and the same has been true of NCPL a well. As for shareholding the majority of the stock is owned by Nishat Chunian Group, which has a stake of 51.07 percent in NCPL. The second major stake is owned by Allied Bank Limited (ABL) which has an interest of amounting to 8.1 percent of the total shares outstanding.
Future outlook The company continues to face payment issues with NTDC which has impacted its liquidity position. However, lower oil prices will have a positive impact going forward, while the projected increased electricity demand will also be favourable.
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Nishat Chunian Power Limited
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Rs (Mn) FY12 FY13 FY14 FY15 FY16
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Net Sales 21585 25166 27630 22575 13854
Gross Profit 5168 5068 4935 5126 4194
Operating Income 5097 5137 4822 4975 3975
Financial Charges -3081 -2424 -1922 -1884 -1219
Net Income 2005 2737 2901 3090 2756
EPS 5.46 7.45 7.90 8.41 7.50
Gross margin 24% 20% 18% 23% 30%
Operating margin 24% 20% 17% 22% 29%
Net margin 9% 11% 10% 14% 20%
ROE 33% 38% 41% 42% 38%
Current Ratio 1.32 2.23 1.36 1.41 1.29
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Source: Company accounts
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NCPL Pattern of Shareholding Percentage share held
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Directors, CEO & their spouse/minor children 0.04
Associated Companies, Undertaking and related Parties 51.1
Of which Nishat Chunian Limited 51.1
Banks, DFI's, NBFIs, insurance/takaful
firms, modarabas & pension Funds 33.2
Of which
Allied Bank Limited 8.17
Mutual funds 0.98
General public 14.6
Total 100
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Source: Company accounts