The Hub Power Company Limited (HUBC) Earnings Call Transcript & Summary

Welcome to the analyst briefing of the Hub Power Company for the year ended 2026. We have with us our CEO Kamran Kamal; CFO Muhammad Saqib; and we have Amjad Raja, the CEO for Thar projects. Before we begin, you are able to in all your questions in the chat box, and we will be answering all your questions after we are done with the presentation. We have also received some questions in advance, and we will be responding to those as well at the end of the session. So I'll hand it over to our CEO and proceed from there.

We'll just go through the HUBCO's footprint. This is the slide that we show our facilities are not operations across Pakistan, primarily in Karachi or around Karachi is hub generation company, our legacy waste plant, Hub Power. Then we also have [indiscernible] , we are building our BYD plant. And in Tharparkar, we have 2 in 13 Thar Energy Limited and Thanova. And also, we have a stake in the Singapore Mining Company. In the middle, we have our ENI assets or the prime energy assets, which are the oil wells, Brid,hadra, Kadanwar. And then in Narwal, we have a plant, which is a 220-megawatt furnace oil plant, reciprocating engines. And in Miripur, we have our hydro 84 megawatts L Energy. So this is a spread across Pakistan, so which makes it a substantial company, and we are pretty diversified in the energy value chain. Talking about our main power generation portfolio. So we have China Power Hub Generation, which is 1,320-megawatt power plant in collaboration with China Power International. It is imported coal-fired coastal power plant. And it is basically -- it has been paying us a dividend and it is operating at a slightly higher load factor as we will see later. Thar Energy and Thar Nova power plants are basically in Tharparkar, they are mine-mouth power plants, and they are producing as a baseload power plants and their availability is above the PPA, which is the 2 KPIs that we have to perform. These 2 power plants this year achieved the project completion date, which is the key milestone before they can disburse dividends and both of them have been able to disburse dividends to the shareholders, including Hub Power Company, and they have other shareholders as well. In Thalova, this is the Thu Industries and Novatex. And in Thar Energy, it is FFC and APCO. Next slide. These are the -- basically the load factors and the availability. So we are required to maintain the availability of the power plant, and it is up to the grid operator, which is now called integrated system market operator SMO, they basically dispatch these power plants. Obviously, [indiscernible] and Tallowa being the cheapest electron in the grid, in the top 5, they get a higher dispatch, although even with the cheapest electron, they do not get the 85% load factor, which is usually a hallmark of the baseload plant. And that is due to the north and south, basically constraint of the transmission. Lara Energy, again, is the downstream on LatAm and it's dependent on the water flows for the irrigation. So it is performing as per the water flows, although we have in the past, have done about 70%. Its benchmark is 64%, but again, it depends on the dispatch and the water available. As I mentioned, China Power. China Power has been doing better than what last year was. And primarily, it is Iran, U.S. Israel war, that due to the lack of LNG production in the center, now these plants are being dispatched and to the level that they require, although they are displacing much expensive electricity in the center, which was produced with LNG, these are much cheaper power plants, but we are not being operated all these coal plants in the south due to their dispatch constraint or the transmission constraint. They are in the INR 11 to INR 12, EPP. So they are being dispatched. Similarly, because of the load shed and because of the constraint of the generation through the LNG plants in the center [indiscernible] has also seen a higher load factor this year. Again, our benchmark remains as a company to make sure that our plants are available at all times and higher than what the PPA requirement is. So all these plants meet that requirement that we have to maintain them higher than PPA. So that the system operator wants to operate these plants and dispatch power, we stand ready and we continue to do so. On the other businesses, I'll -- so the prime energy, which is formerly ENI has acquired 2 onshore blocks called Sukhpur and Naing Sharif. These are exploration blocks. And then we also participated in the 4 offshore blocks in the -- basically, the -- they are called shallow offshore in Pakistan, they about 20-odd blocks, which were put up for bidding and trying as partner in [indiscernible] an operator in one of them, Sapan, which we will basically be emanating as a lead operator role. We have also trying also did the offshore, we continue to look at offshore fields in the -- I mean, West African basins. So we will be able to update you if there is any success. And we will continue to pursue the new drilling opportunities. We are looking at a few formations in the middle in is wherever we have our oilfields or gas and oil exploration blocks. And that program is currently underway. Our metals was another of our investment into the mining sector. and that has completed its first reserve report for that block that we had in Balochistan. And now we are looking at additional dredging and basically evaluating the prospect to make it economically viable because there's a certain threshold that you need to have in the first reserve report to go into the bankable feasibility study, and we are continuing that drilling exploration or drilling program. But obviously, if you do the situation, it has slightly slowed down, but we remain committed we had, in the meantime, also done the prospecting for the lithium reserves in the country and that report, which is called a scoping, basically report that is called, and that those open study results were promising. But it is basically being looked at once the mining policies are harmonized, then we would basically put a requirement for taking up a block of lithium reserves as well, which happened to be in the north and the northwest of the country, not in the south of the country. So that is an area that we will be looking at. Now comes our latest business, which is under media operations and also the plant is under construction. So this is the time line of the products that we have launched into the country. At [indiscernible] were launched at the first -- in the first phase, then the Shark 6, then at to 2 Sealion 6. So some of the milestones is that we are now a number in the largest EV or the new energy vehicle company in the country with the larger share of EVs. And then we view some of the significant things that you saw was that we had imported 2,000 cars in a roll on road of vessels, which were advertised because the surge in demand after it's ready around U.S. at -- there was a note demand for the EVs due to the petrol prices and the orders were basically in order to serve the orders, we had to bring in the RoRo vessel, which couldn't be done in the containerized vessels as well. We remain committed to basically take the 30% market share by 2030 because we feel that the world is moving towards new energy vehicles. and new energy vehicles are not only electric vehicles. It's also plug-in hybrid electric vehicle, which we have demonstrated with the sale of Shark 6, which you would see has done really well and alone that's doing one of the -- I mean, the foremost product that we sell at this point in time. There are a lot of other time product line that we intend to launch when the plant production starts, which will be PHEV and EV. And we are confident that the product will basically stand out against the competition that exists in the market. The price here that we've seen that we are cognizant of the of the affordability and the market size. So the AI is at a very competitively priced product at 7.9 million. And it has had a very, very good response from the market as well as you would see around Euromaich city you are living in. On to the plant side. Obviously, this -- it achieved financial close in the January of 2026, but we have started the investment and the construction of the project much earlier. The production capacity is 25,000 units a year, but it can be scaled up to 50,000 in a shortest possible time because a lot of facilities are already built for the 50,000 units. The project COD is expected as always we maintained that in the second half of 2026. Obviously, it's an ambitious time line, but we remain committed and given our track record of delivering large-scale projects, we remain very confident that this will be -- COD will be achieved in the second half. The product line that we have thought about will basically be the new energy vehicles and it will be targeting the key market segments within the automobile segment as well. There are facilities that we've been funded by HPL, by Bank of [indiscernible] which is using the AFT facility and British investment international facility as well. Some of the things that in order to achieve our 25,000 unit sales, we had 5 flagship experience and dealerships that we had built last year. So Metropole and Corani were the 2 in Karachi or Babalwa, Gilbert and DHA so it was the other one. In the same bar, there was an Islamabad Express way. And everybody who's experienced or gone to our centers has come up with a feedback, and we want to maintain the highest and. So first, third-party leadership that we opened was in slab followed by the fine Avenue in Lahore, which is closer to the drive road or the shops, as you would know. Now we are already in the process of expanding it. So the Karachi saw the first third-party dealership in the Kia South, used to be [indiscernible] Now it's going to be rainy cell. So a lot of that -- we have a lot of interest from we have assigned the -- or given the contracts in GujanamaLanSa board, Peshawar, Islamabad, Lahore, these and [indiscernible] as well. So these will be coming up. And the Tier 2 cities will see it. We are very confident that our next network expansion plan will enable EV and PHEV adoption at a much faster pace than I mean, we have seen in this country. And I think there's a value for money for the consumer in terms of the CapEx and the operating cost of this -- this is where I think we have taken the industry leadership. We were hoping that others will follow the suit. But unfortunately, it happens that because we are the largest EV company, we have set up 24 charging, DC fast chargers across Pakistan. So we can confidently say that if you own any of our vehicles, you can drive from Karachi to Pasha and even legally and come back, and that's how we've covered. At this point in time, you will see our charging station every 200 kilometers on the motorway from Karachi to Bear and every car that we have, obviously, we -- our goal remains to have it as many as possible. So now we will be moving towards bringing it to 150 kilometers on these highways and then bringing them down to 100, 100 kilometers. And these are the charging stations that we only have. If you want to look at the other charging stations, which people have put up privately, there are a lot more on the way as well. I think at this point in time, if we were to look at in Pakistan, there are more than 10,000 charging points in the country because BYD was the only company which started giving out free charges with the cars as well. So every household, every owner has a charging point. Obviously, it's a 7-kilowatt charger, which takes 7 hours to 10 hours to charge the car. But these car chargers take about 25 to 45 minutes to charge the top and we remain committed. These are 24/7 available, which is also a hallmark of our charging stations. There are -- there is an app that you can sign up for, you can test it. It will do the road, ladder, the journey planning for you as well. And I think it is an enabling environment that we are trying to create. Alpine in teal basically volunteered and we are now in talks with multiple resorts along the way who desire to put up a fast charging, and we provide O&M services for them. We take care of it and our charges are up time is almost 9%. So we have not had a hundred on any of our charges that there has been a downtime. And I must mention that the government came up with a charging station tariff 1 which we have been able to do on a 50% of these. So that is the charging that they charge, so it's not commercial, but some of them are on backup diesel generators as well with flowcharting is 10 to 12 hours, but our uptime is -- these are financial highlights. So I will leave it to Saket share some of these.

Thank you, Tara. So on a consolidated basis, as compared to last year, we and a total profit of PKR 24.4 million versus PKR 19 million last year. And the main reason is that we've been able to get high dividend income from subsidiaries and associates. And also the fact that once -- after repayment of our loans, side in 2025, there is very limited financial charges. So Global [indiscernible] crossed also inventory to the profitability. And the one negative is that we had a revenue for 1 quarter of 2025 from [indiscernible] there was no revenue from our book in this last year. On a consolidated basis, our net profits are up almost 8%. We made PKR 3 million extra as complete last year. presenting in PKR 3 increase in EPS. And the reasons are that we had a higher share of profits from our associates and then on an consolidated basis also, we had lower finance cost to debt repayment and lower interest rates and the dividend negative as been revenue to combination with people. the petition of this call, as mentioned in also, we have actually won the conclusion with the lucky metro and basement, and we are have interest on to disclose for fast, we have been choked and we submitted it for Jaco. And so patient consortium has been corporately qualified for Prescott.

Okay. These are some of the [indiscernible] and recognitions for as price to be almost in the forefront and some of the awards and recognition for the last year. having the stage where we are being given an employer of choice for gender diversity award, open equity. We've also received the CSR or and we've also received the board word for the South Asian Federation of Accountants for the best presented annual report. This is a bit of a highlight on the environment, social and governance part of it. We have -- we continue to strengthen the governance on ESG in terms of SCP guidelines. And on that purpose, we have achieved ISO certifications for our plants, and we have secured green office certification as well. We continue to proceed on the sustainability road map.

The CSR remains, again, we do it on an education, lively health care and infrastructure. We have done multiple initiating multiple initiatives like we have partnered to sell our BT with a simple operation foundation set up at high clinics and in its core. We are also doing some of the scholarships for the science programs in the area and enabling those kids to participate or attend those schools. -- some of the boarding schools. We are doing training for the women in the area, in the digital technology so that they can earn the line through that. We support [indiscernible] we support the health care facilities in the areas around us. Obviously, infrastructure remains one of that. So we do sanitation. We've done mother and child care. The clinic in [indiscernible] as well. So these are the focus areas because we operate in the remote areas, and we are we are contributing to the local nonprofits and the local institutions in these domains as well because we wouldn't that to make an impact, so it is better to focus on these 4 areas rather than spread them and give these donations across different areas.

Okay. Now we'll move on to the questions. There are some which we received in the chat box. Okay. So there is some which we have already received in advance, maybe we can pick up those first. What is the exact time line for commercial operations at the Garo assembly plan? And what are the BT's current monthly CBU sales?

So I think we've answered that this is the second half I mean, this quarter primarily what this will be commissioned. And then the sales we've said that we are the highest EV selling company, and we are the market leader in an [indiscernible] So the monthly volumes very, actually, as I've said, it's hard to give you a number in that sense.

Once the run CKD plant is operational, local assembly will eliminate the heavy CBU import duties and improve the cost per unit will the company retain this cost benefit to expand gross margins or if you pass it on to the consumers through price reductions to prioritize volumetric growth and market share?

So we've been pricing our products very competitively even at the CBU state and continue to remain committed to that part as well. Obviously, these -- there will be a different definitely new additions to our offerings. So we will be able to comment on to it once we are launching it. We don't make such comments. But at any point in time, our management and our Board's commitment is to basically provide a value product to our customers as well. And as you would have seen that all our products have been competitively priced and value for money in terms of the price, upfront price and in the long term as well. So that is the value that we offer as a BYD card to any customer.

[indiscernible] proposed a true-up tariffs could potentially reduce CPTC's annual ROE. What is the current biggest status of CPTC's appealed against the true-up?

Let me address this issue, which I mean with someone's the view about this has been, I mean, misconstrued. So Nepra actually, the power sector operates on the 2 regimes. One is a cost plus and one is the upfront dire. And now one needs to understand that what was the need for bringing up the upfront tariff in 2013, and then there was a review petition and it was withheld in 2014 as well. Anybody who's followed the power sector long enough knows that the earlier part was a cost-plus tariff where you would put up a power plant, you will be given an interim tariff. Once you do the construction of the project and achieve the commercial operations, we will go back to NETRA. They will audit your all the financial trades and everything, and then they will award you a true-up tax. So that true-up tariff was based on the evidence that you provide, the cost that you have been allowed, the openers or the escalations that were allowed. That was the regime which existed for the longest period in time. The upfront tariff was basically brought in because there was no investment that had taken place in the power sector from 2008 to 2014. So the need was that in order to -- there was a lag and there was a lot of concerns by the -- under the sea pack as well. So they came up with a feed-in tariffs, it's called globally as well. We call it uptrend tariff. -- where Nera came out and said, okay, this is the tariff that we are going to offer, whoever adopt it there will be minimal adjustments to it. And what were the adjustments. The adjustments was CPI, the dollar exchange rate, what will be your debt-to-equity ratio and all of that. And that spirit was withheld in the first case that is being presented by someone. There is some ballast was the first one. The project was completed in 27 to 29 months, and they were awarded 48 months with the spirit of upfront [indiscernible] . Somebody can anticipate and interpret the subsequent decisions, but the spirit of the upfront tariff remains that whatever you have been awarded as long as you accept it with the minimum then, the openers are very clearly defined there as well. So it is not an ambiguity in 2 tariff upfront direct petitions. Everything has been deliberated, debated and the final verdict of -- so people are drawing comparisons from the subsequent interpretation by the Nera, which has no legal value in terms of what they have said in the Saibal and to everyone, I mean people do not know that -- during the upfront tariffs, a lot of clarifications were sought by the developers, and one of the letters was awarded by Nera to one of the developers, which clearly stated that 48 months of construction period means that you will be awarded construction period of 48 months, regardless of the construction time that we take to build your project. Now in presence of these 2 predict, anybody taking a view is at liberty to take a view, but I personally think that legally, this is indefensible that you know anything different than this can be. And I think anybody who understands the regulatory framework in this country -- it works on the principle of consistency and in the precedents as well. So all these projects that are being integrated in a different line are not basically seen as a consistent to what their earlier decision has been and what their earlier clarification has been when no project has come online. And that has not disputed or the Enterprise is never ever. In terms of when do you adopt the upfront tax -- so that also was the date of adoption is consistent. So the reason we say China Power was the first project, which actually submitted its application and the issue came up that weathered the adoption because the indexation operates on those days when you are actually awarded. So our application and the approval had 2 months or 3 months difference. And there was a movement in the CPI and other things. So NEPRA basically came out and said, no, the day we granted the approval, that is the day the indexation will start. And that consistency principle was applied to across the board as well. So this is one of the clarification which came before any project came online and taking the same precedence, we are actually very confident that this is what will be if anybody was to say that they have the right to do or -- I mean, reintegrate whatever they have given in upfront tariff, then basically, there's no upfront tariff in this. So all those orders were very clearly presented somebody can take whatever view, but we think we are very consistent, and it is not the issue to CPC. It is a larger issue of the upfront and the upfront regime. And everybody should know that we are one of the projects, but there are international projects that are the international investors or the developers there. So I think it is not an issue which is to be taken lightly and there is no interpretation that is different than what our interpretation remains. We have done this view, and this has been -- and our auditors are one of the big 4s for the last 6 years. All this time, they have been -- I mean, there has never ever been any concern by anyone, neither in the industry or in the other places as well, and we've been reporting this throughout. So that's the case. I think we personally have been very, very confident. And we -- at this point in time, 2 of the projects are in the [indiscernible] One is Endota and China Power but that does not mean that this pertains to only these 2 projects. It is just the process that you go if you're in a brief, then you go back to them. And that decision, whenever that comes, we are very confident that it will be as per our view. But again, it remains subdued. So it is early to say what the outcome will be, whenever it will be very upfront and forth rights.

Okay. Following the early termination of the base plant PPA, 1,100 acres of industrial land have become available. In the last briefing management mentioned that it was considering several options, including an SPM oil terminal pipeline to PSO terminal and aluminum matter and a data center. What is the latest progress on these options? And has management shortlisted any particular project?

So the business development in the greenfield, particularly in Pakistan is a long haul, and it's a challenging, I mean, process. So we have been engaged with multiple Middle Eastern entities for the oil storage project, the PSO that we were doing. And you would have heard about the oil storage initiative. The government of Pakistan is taking and they're undertaking another study after the Mott McDonald's strategy was done several years ago. So we have engaged with the Middle Eastern large, I would say, the oil and gas entities and they are evaluating it. I think it will depend on to what the country strategy remains because if you want to do the crude oil then there will be a different strategy. And if you were to set up the refined oil product storage, then these tanks are much more suitable. Again, this is -- we remain engaged on to this. onto the smelter project, we have made a significant progress. We have commissioned the feasibility study with one of the best institutes in the world, which has been part of development of almost 30 smelters in the last 40 smelters built globally. And we are basically in talks with them. It remains how the energy solution will be worked out for the smelter. Just to give you a context, the energy requirement for smelter is that 1 tonne of aluminium requires 1.4 megawatt of power. So if I were to set up a 300,000 tonnes of a smelter, we are talking about 500-megawatt of power generation capability, 24/7, 300-plus days with nonstop. So I think it is something that we have to look at the power solution, not only as a power solution but also the quality of power. And we are in talks in the government of Pakistan on to how they can promote the energy-intensive industries in Pakistan, which have an export potential as well. So progress is very promising. Obviously, we will be updating U.S. and when we have something significant to report. As I said, in the lead time for these projects is very long, and they require a lot of technical and financial and regulatory approvals and a lot of those questions to be answered. On the data centers, I think we did evaluate it, but we believe that this is suited for people who are already into the businesses, which are closer to the services that are being offered to the consumers of the data or the IT and other things. So I think this is -- we are part of the value chain in terms of the energy, but we are not going to be pursuing it very actively at this point in time. But we remain -- we continue to evaluate opportunities, which are in the larger scope of our company.

Some of them we've already touched the seals. It is one of the things which have we evaluated to converting the plant to coal-fired.

So I think at this point in time, Pakistan has an excess generation in South. So there is no need. I least firmly believe that Pakistan needs [indiscernible] has a [indiscernible] not a generation surplus generation crisis, but a demand decline prices. And that is why we have been allocating for energy-intensive industrial policy. We are advocating for the pricing in a way that actually increases and encourages demand. We need to bring people to the grid, which -- who have been reneging because of the higher greater pricing, and I think there is a lot of work needs to be done. And I think a lot of this work will -- we are hopeful we'll get done when the [indiscernible] privatization happens. There has been an underinvestment into the distribution and the transmission systems of the country for the far too long. And I think the only way to bring and attract investment into it is to reform the sector on those -- in those areas, plus encouraged demand coming on to the grid, which has not been coming due to the pricing of this power by the transmission and the distribution systems.

Okay. I think update on ENI Prime has already been done. Will you have [indiscernible] will have to increase dividend in future years? I think I was optimistic as said a target price of PKR 1.76 for citing concerns about future earnings are concerned is the management about these factors and how does it respond to this outlook.

I think if somebody wants to predict future and they're better at it, we don't -- I mean we don't treat about it. We do our own job. We do whatever we are supposed to do, operate these plants at the best capacity and availability. And I think I've given a detailed regulatory review, if somebody needs a fundamental understanding of this structure, there's little that the management can do. I think that's the I mean, entitled to their view. But that's not the view, which is -- which holds in the power sector and how our structure is structured.

Okay. Is there any gas production increase expected in any of the legacy ENI wells? Will there be any decommissioning of over [indiscernible]

So the decommissioning actually happens as per the plan, and that is part of the process because some of the fields are declining, and we are in partnership with many of the other ESB companies. In terms of the -- obviously, we have a significant development well program the success relies on to whatever the success is. We are hopeful that the development plan that we have will result into a positive outcome. But in E&P, the probability of success remains low. It is below 20% at the best places as well. So I think that uncertainty remains. But the development well program that we approve every year is with this expectation that we will increase the production from these wells as well. And also, we've been taking new blocks in Pakistan, and we have been looking at offshore investments as well with the with eye on to future growth into this business of par.

What is the total outstanding receivables of each power plant of HUBCO?

Okay. So receivables are positively consistent. They have not increased. So it will be how by each entity then in Nava, we have a total overdue on only PKR 1 billion in are, we have PKR 5 billion in China Power the total, including NPI is PKR 65 million, and in TLs EUR 8.3 billion and interline.

Okay. plants are located in blister have security challenges due to the volatile situation in Balochistan, as Avcon the government taken any appropriate security measures.