Historical performance
(Note: LPL's financial year end is 30th December)
Even though LPL registered an increase in revenues from FY11 to FY13 LPL, it has subsequently witnessed its top-line take a hit in the past two years. The gross and net margins however continued to slide from FY11 to FY13 with the lowest point of the firm being FY13 in terms of profitability.
The director's report attributes this to an increase in delta loss which it measures as grams per kWh fuel consumption. The net margin was reduced from 4.83 percent in FY11 to 1.76 percent in FY13. However since then the company has managed to recover somewhat and its net margin has risen up to 3.85 percent.
From an EPS of Rs 4.15 in FY11 the company has slid down to an EPS of Rs 2.24 in FY15. While the rise in FO prices coupled with a higher load factor has indeed increased the top-line during these years, it also simultaneously chipped away at margins on account of a higher generation cost thereby resulting in a fall in the EPS.
Throughout the past five years LPL has had issues with WAPDA which is its sole customer over payment of dues. By the end of FY15Rs 6.68 billion was outstanding against WAPDA out of which Rs 4.50 billion was classified overdue. The company has blamed this delay in payment for disruption in fuel supply which in turn affects its generation performance.
Lalpir Power Limited continued its steady performance although the top-line took a considerable hit during FY16 which might be attributable to lower furnace oil prices during the period as well as lower despatches. The company continues to face issues with CPPA against payment of dues which has resulted in erratic fuel supply and hence the reduced capacity factor.
Even though revenue was markedly lower as compared to the previous year, the company was able to earn a better profit margin due to a decrease in the delta loss which meant lower fuel consumption per kWh generated.
However, like the majority of IPPs LPL has been facing the adverse impacts of circular debt and was owed Rs 8.6 billion as outstanding till 31 December, 2016 out of which Rs 4.24 billion was classified overdue. The rise in circular debt has affected cash flow and constrained liquidity of the majority of IPPs in the power sector and LPL has been no exception.
FY17 saw LPL's revenue increase by 19 percent although dispatch level remained low on account of lower demand by the CPPA. However, the company's profitability margins took a slide which the company attributed to higher delta loss or higher fuel consumption in simpler terms. At the same time, the company's outstanding receivables against CPPA increased to Rs 10.7 billion out of which Rs 569 million was classified as overdue.
In 1QYF18, Lalpir Power Limited had a considerably lower capacity factor of 28 percent against 46.3 percent in the same period last year. This translated into a decrease in the top-line. LPL's profitability also fell on account of lower generation and the company's liquidity remained constrained.
Stock performance/ Shareholding pattern
Lalpir Power Limited has outperformed the benchmark KSE-100 index since August-17. The expansion into renewables with an imminent solar power plant might garner investor interest in the future if the profitability of the company also rebounds. The majority shareholders include an 18 percent stake by Engen Pvt. Ltd, almost 29 percent by Nishat Mills Limited and 7.2 percent by Adamjee Insurance Company Limited.
Future outlook
.LPL has entered into a contract for a period of thirty years for purchase of fuel from Pakistan State Oil Company Limited (PSO). The company has also entered into an agreement with General Electric (GE) to improve plant performance.
The project aims to improve LPL's plant performance by reducing fuel losses. On a positive note, LPL's position regarding non-payment of liquidated damages has been accepted by the expert appointed by the court following which the company does not have to pay any damages.
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LPL: Pattern of Shareholding
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Category Shares held Percentage
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Directors and their spouse(s),children 26,006,412 6.84
Associated Companies, undertakings and
related parties 212,589,863 55.97
Public Sector Companies and Corporations 1,475,000 0.39
Banks,DFIs,NBFC, Insurance,
Takaful, Modarabas and Pension funds 19,882,410 5.23
Mutual Funds 47,199,810 12.41
General Public
a. Local 20,023,472 5.27
b. Foreign 27,363 0.01
Foreign Companies 678,027 0.18
Others 51,956,375 13.68
Totals 379,838,732 100.00
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Source: Company accounts
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Rs (Mn) 1QFY18 1QFY17 Chng YoY
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Revenue 3249 4356 -25%
Cost of sales 2617 3804 -31%
Gross profit 632 552 14%
PAT 381 320 19%
EPS (Rs) 1 0.84 19%
Gross margin 19.5% 12.7% down 680 bps
Net margin 11.7% 7.3% down 438 bps
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Source: Company accounts