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Summit Power Ltd: 3Q 21 earnings up by 10% due to higher power generation; Reiterate BUY

  • SUMITPOW BD reported 3Q FY21 NPAT of BDT1,455mn (EPS: BDT1.36) implying a c10% yoy increase
  • 3Q 21 Revenue stood at BDT 10,122mn, up by c108% YoY
  • 3Q FY21 Net finance expense was BDT354mn vs net finance expense of BDT120mn in 3Q FY20

SUMITPOW BD reported 3Q FY21 NPAT of BDT1,455mn (EPS: BDT1.36), implying a c10% yoy increase against NPAT of BDT1,323mn (EPS: BDT1.24) in 3Q FY 20. 9M 21 NPAT stood at BDT4,465mn (EPS: BDT4.17) vs BDT4,354mn (EPS: BDT4.08) in 9M 20.

3Q 21 Revenue stood at BDT 10,122mn, up by c108% YoY. Gross margin stood at c25% against c49% in 3Q FY20, attributed to higher revenue contribution from oil-based power plants. This is to be noted that the revenue base of oil-based power plants is usually higher for the same amount of gross profit compared to gas-based power plants. This is because the revenue amount includes the cost of fuel, which is higher for oil compared to gas.

3Q FY21 Net finance expense was BDT354mn vs net finance expense of BDT120mn in 3Q FY20. Finance expenses in 3Q 21 were BDT392mn vs BDT468mn in 3Q 20. Foreign  exchange  loss  of  BDT1mn  vs  forex  gain  of  BDT273mn  in  3Q  20 resulted in an unfavourable base effect and eroded some earnings.

We reiterate BUY with TP unchanged at BDT47.2 (ETR +15.5%) for June 2022. Our TP implies 9.6x 2022f P/E and 5.7x 2022f EV/EBITDA. At the current market price, 22f dividend yield stands c9%, which is attractive as the average deposit rate stood at 4.5% in January 2021. We believe the stock can offer upside potential.

Please note that our TP implies 2% bottom-line 2022f-2027f CAGR but 4.6% dividend 2020f-2027f CAGR as we expect SUMITPOW’s dividend payout to increase from 68% in 2020 to stand at 89% in 2027.


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