ALTN entirely owns Power Management Company (Pvt.) Limited which in turn holds almost 60 percent shares of Rousch (Pakistan) Power Limited (RPPL). Being an unlisted company, RPPL is an independent power producer having a gross capacity of 450 MWs from its gas-fired combined cycle thermal power in Khanewal, Punjab.
Historical performance ALTN witnessed an increasing profitability trend in the past five years with the bottom-line registering positive growth over the years. However, the company's revenues and gross profits have fallen in the past two years relative to exceptional performance during FY14.
The despatches were highest in FY14 amounting to 205,398 megawatt hours (MWH) which have since fallen to 175,069 (MWH) in FY16. A pertinent reason for the above average net profit of Rs 1868 million and EPS of Rs 5.14 in FY14 was an inflow of high dividends from its subsidiary company which amounted to Rs 1666 million. Relying on WAPDA as its sole customer has caused liquidity problems for ALTN similar to many other IPPs but the company has so far been able to manage cashflows effectively.
In FY16 ALTN operations suffered from partial / complete disconnections of gas by Sui Northern Gas Pipelines Limited (SNGPL), due to acute gas shortage in winter months. Moreover, the company also undertook maintenance of engines that had reached 46000 operating hours according to the company report.
According to the agreement of gas provision to ATLN's subsidiary RPPL, the Ministry of Petroleum and Natural Resources issued an allocation of 85 MMSCFD of RLNG to RPPL on a firm basis in September, 2015 with long term gas supply agreement under process.
Snapshot 9MFY17 ALTN witnessed decent growth in sales on account of higher despatches during 9MFY17. Revenue registered an increase of 11 percent as compared to the corresponding period whereas despatches increased from 117.02 GWh to 126.8 GWh. Similar to other IPPs Altern is also facing liquidity constraints due to delay in payment by WAPDA. The company notes in its recent quarterly report that the total amount of receivables as of 31 March, 2017 stood at Rs 549 million.
ALTN also reduced its financing cost by paying off Rs 104 million including accrued mark-up during the period. This resulted in the finance cost decreasing by almost 84 percent on a year-on-year basis. The provision of gas also improved resulting in better performance for 9MFY17. During the period when gas was unavailable the company undertook major annual maintenance activities on its plant. The company registered an impressive increase of 43 percent in its profit after tax whereas the EPS increased by 47 percent on a year-on-year basis.
Stock performance ALTN lagged behind the KSE-100 and continued to under perform the index till September, 2016. However, it showed an impressive surge in September which gave momentum for the next couple of months. The stock ended the year on a downward trajectory and continued its decline against the benchmark till April 2017. There has been a sharp spike recently with the script gaining ground on the back of improved profitability and sound fundamentals.
Future outlook The construction of new RLNG terminals and the provision of uninterrupted and cost effective gas supply is a key factor in the future profitability of ALTN. As new RLNG terminals are being set up to increase the supply of imported RLNG in view of the Pak-Qatar gas agreement, gas based IPPs including Altern Energy seem to have a promising future. In the short to medium term the diplomatic crisis in Qatar would not affect the company's operations.
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Altern Energy Limited: Pattern of shareholding Percentage share held
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Directors, CEO & their spouse/minor children 0.001
Associated Companies and Related Parties Of which 58.17
Descon Engineering Limited (CDC) 58.17
Banks, DFI's, NBFIs, insurance/takaful firms,
modarabas & pension Funds 1.22
Mutual funds 0.09
Foreign investors Of which 18.5
Saudi Arabian Construction and Repair Co Ltd 17.05
General public (Local) 4.8
Joint-stock companies 17.05
Others 0.15
Total 100
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Source: Company accounts
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Altern Energy Limited
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Rs (mn) 9MFY17 9MFY16 YoY
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Sales 1,172.0 1,055.0 11.1%
Cost of Sales 1,040.0 939.0 11%
Gross Profit 133.0 116.0 15%
Administrative cost -26.0 -16.0 63%
Finance cost -6.7 -42.0 -84%
Profit before taxation 100.0 68.0 47%
Taxation 0.2 2.0 -91%
Profit after tax 100.0 70.0 43%
Earnings per share (Rs) 0.28 0.19 47%
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Source: Company Accounts
Copyright Business Recorder, 2017