Book Building @ Rs18-30/sh | Viable

Saif Power operates 225 MW combined cycle thermal power project with a net capacity of 209 MW, under the government of Pakistan’s power policy 2002 on a build, own and operate basis in the Sahiwal District of Punjab.

The company is selling electricity to NTDCL through a power purchase agreement dated 30th April 2007 (the PPA) which has a tenor of thirty years.

Plant Details

Saif Power is a 225 MW combined cycle thermal power project having an operating capacity of 209 MW. The plant has two gas turbines and one steam turbine. The gas turbine is 6 FA machines procured from General Electric, France.

Fuel efficiency of the complex is one of the highest in the Pakistan market. Complex fuel efficiency determined by NEPRA on Gas is 51.2% and 48.5% on HSD. The cost of fuel is a pass through item as determined by the regulator, NEPRA.

Key Points

v  Offer for sale of 48.3 mn ordinary shares (12.5% of the Total Paid up Capital)

v  Book building portion of the offer comprises of 36.2 mn ordinary shares at a price band of Rs18-30/sh. General Public portion of the offer comprises of 12.07 mn ordinary shares

v  Total paid up share capital of 386.47 mn shares.

v  Total project cost Rs17.6bn

v  Project life 30 years (26 remaining)

v  Natural gas and HSD to use as fuel source for electricity generation

v  Net capacity of 209.78 MW

v  Gas supply agreement signed with the SNGPL limited for 25 years

Interim Dividend of 20% for period ended 31 March 2014.

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Valuation | Book Building @ Rs18-30/sh | 1QCY14 EPS 1.34 | PE of 5.71x

We show our positive stance on Saif Power Limited as company has posted revenue of Rs3921mn in 1QCY14 with a net margin of 13% showing a consistent increase in margin.

Company is conscious regarding its Long Term Debt to Equity ratio and a consistent decline is been witnessed since CY2010 hence allowing a company to control its finance cost.

We expect earnings to grow in CY14 as compared to previous year.

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