Kesc-Analysis
Karachi Electric Supply Corporation
Worth a look courtesy expected power sector reforms KESC Current Price: PKR 7.08
Thursday May 31, 2013
We highlight Karachi Electric Supply Company (KESC.PA) as one of the beneficiaries of the rigorous power sector reforms expected to be introduced by the incoming government as the company is both a generation and a distribution unit We have not yet initiated active coverage on the stock however; we believe the stock should be considered by investors given the emerging favorable industry scenario
Bloomberg Reuters MCAP (USD mn) 12M ADT ( USD mn.) Shares Outstanding (mn)
KESC.PA KESC.KA 163 4.4 27,503
Through a one‐time adjustment of the entire overdue amount, the company will be able to offset its payables completely. Resultantly, the short‐term borrowing would come down significantly along with the finance cost By employing ways to tackle electricity theft, the recovery ratio of the company would increase subsequently escalating the number of units billed and reducing the T&D losses If the reforms are implemented in true spirit then our back of the envelope working suggests that every 1% decline in T&D losses would add PKR4,236mn (EPS:PKR0.17/sh) to the company’s profits
Valuations EPS 2010 ‐0.66 2011 ‐0.39 2012 0.11
Incoming government to rejuvenate the power sector
The listed power sector, on the back of the rigorous power sector reforms expected to be introduced by the incoming government has rallied significantly. The impetus stems from ease in cash recoveries, one time net receivables adjustment and higher dividend payouts. Apart from tariff increase which would benefit higher cash generation, the government will have to focus on revamping the distribution and transmission networks to reduce unbilled units and losses by distribution companies. Thus, this surfaces a trigger for all the
Worth a look courtesy expected power sector reforms KESC Current Price: PKR 7.08
Thursday May 31, 2013
We highlight Karachi Electric Supply Company (KESC.PA) as one of the beneficiaries of the rigorous power sector reforms expected to be introduced by the incoming government as the company is both a generation and a distribution unit We have not yet initiated active coverage on the stock however; we believe the stock should be considered by investors given the emerging favorable industry scenario
Bloomberg Reuters MCAP (USD mn) 12M ADT ( USD mn.) Shares Outstanding (mn)
KESC.PA KESC.KA 163 4.4 27,503
Through a one‐time adjustment of the entire overdue amount, the company will be able to offset its payables completely. Resultantly, the short‐term borrowing would come down significantly along with the finance cost By employing ways to tackle electricity theft, the recovery ratio of the company would increase subsequently escalating the number of units billed and reducing the T&D losses If the reforms are implemented in true spirit then our back of the envelope working suggests that every 1% decline in T&D losses would add PKR4,236mn (EPS:PKR0.17/sh) to the company’s profits
Valuations EPS 2010 ‐0.66 2011 ‐0.39 2012 0.11
Incoming government to rejuvenate the power sector
The listed power sector, on the back of the rigorous power sector reforms expected to be introduced by the incoming government has rallied significantly. The impetus stems from ease in cash recoveries, one time net receivables adjustment and higher dividend payouts. Apart from tariff increase which would benefit higher cash generation, the government will have to focus on revamping the distribution and transmission networks to reduce unbilled units and losses by distribution companies. Thus, this surfaces a trigger for all the