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Securities

46
Kot Addu Power Company

Sensitivity Analysis
Unfortunately, our economic growth prospects are no longer as strong as they were

beingpredicted just a few months ago. Despite the US economy lingering amid the current creditcrisis; the widening trade

deficit and severe political unrest has put a lot of pressure on thelocal currency which is losing worth against the greenback. The

economic slump may takeyears to resolve and it is yet uncertain how long could it take the country to achieve stabilityand win

back the confidence it has lost within a matter of months.Kapco s earnings are very sensitive to the US$-PRs parity. The companys

high capacityand availability yield to large escalable component of tariff. The escalable componentund ergoes an

inflation and exchange rate adjustment as per the US inflation rate and theprice of US dollar against the Pak Rupee.We thus

believe that KAPCOs share offers an ideal sanctuary to the investor, shelteringagain st the ailing Rupee in the coming years.

We have assumed that Rupee would depreciateby 1.15% from 2008 onwards. However, we present the

following fair prices under US dollar inflating at various other rates, for the convenience of our reader.
Source: IGI Research

US$ inflation rateWithout

expansionWith expansion0%56.326 2.590.50%57.9864.2 41%59.765.951.15% 60.2366.481.25%60. 5966.831.50%61.49 67.721.75%62.4168. 631.90%62.9769.18 2%63.3569.562.50% 65.2771.453%67.27 73.42

Table 34: US$ inflation Sensitivity analysis

Securities

47
Kot Addu Power Company

Sensitivity Analysis
Unfortunately, our economic growth prospects are

no longer as strong as they were beingpredicted just a few months ago. Despite the US economy lingering amid

the current creditcrisis; the widening trade deficit and severe political unrest has put a lot of pressure on thelocal currency which

is losing worth against the greenback. The economic slump may takeyears to resolve and it is yet uncertain how long it could take the

country to achieve stabilityand win back the confidence it has lost within a matter of months.KAPCO s earnings are

very sensitive to the US$-PRs parity. The companys high availabilityrating to WAPDA yields to large escalable component of tariff. The

escalable componentunde rgoes an inflation and exchange rate adjustment as per the US inflation rate and theprice of

US dollar against the Pak Rupee.We thus believe that KAPCOs share offers an ideal sanctuary to the investor, shelteringagain

st the ailing Rupee in the coming years. We have assumed that Rupee would depreciateby 1.15% from

2008 onwards. However, we present the following fair prices under US dollar inflating at various other rates, for the

convenience of our reader.

ur

iti

s
This document has been

prepared by IGI Finex Securities Limited (formely Finex Securities Limited) and is for information purposeonly. Whilst every

effort has been made to ensure that all the information (including any recommendatio ns or opinions expressed)cont ained in this

document is not misleading or unreliable, IGI Finex Securities Limited makes no representation as to the accuracyor

completeness of the information. Neither IGI Finex Securities Limited nor any director, officer or employee of IGI Finex

SecuritiesLimite d shall in any manner be liable or responsible for any loss that may be occasioned as a consequence of

a party relying on theinformation. This document takes no account of the investment objectives, financial

situation and particular needs of investors, whoshould seek further professional advice before making any investment

decision. This document and the information may not bereproduced, distributed or published by an recipient for any purpose.

Disclaimer
Analyst Certification
We, Tahir Hussein Ali & Muhammad Ashar Khaliq, hereby certify that the views

expressed in this research report accurately reflect our personal views about the subject, securities and

issuers. We also certify that no part of our compensation was, is, or will be, directly or indirectly, related to the specific

recommendatio ns or views expressed in this research report.

Research Team
Tahir Hussein AliOi

l & Gas, IPPs, Mutual FundsTel: (92-21) 111234-234 Ext.:806tahir. ali@igi.com.p k Sobia Muhammad

DinStrategy , Economy, Global Markets,Tel : (92-21) 111234-234 Ext.:809sobia. din@igi.com.p k Financial

Sector, Chemical, TextileShayan Hasan JafryPolitics , Commodity, Cement,Tel : (92-21) 111234-234

Ext.:808shay an.j afry@igi.c om.pk Fertilizer , Telecommunic ation A s h a r K haliqAutom obile, IPPsT el: (92-21) 111-234-

234 Ext.:81 1ashar.khal iq@igi.com. pkS a r a h J u nejoRefine ryTel: (9221) 111234-234 Ext.:823sa

rah.junejo @igi.com.p k Ahmed Ra za KhanCon sumerTel: ( 92-21) 111234-234 Ext: 804ah med.raza@i

gi.com.pk A bdul Sajid DatabaseT el: (92-21) 111-234234 Ext.:8 13abdul.sa jid@igi.co m . p k Manso

or AhmedDe sign, Layou tTel: (9221) 111234-234 Ext.:812ma nsoor.ahme d@igi.com.p k

Equity Sales
Tanvir Ab id, CFA ( KHI)Tel: ( 92-21) 5301304tanv ir.abid@i gi.com.pk

S h e r A f g a n ( L H R ) T e l : ( 9 2 4 2 ) 6 3 0 0 0 8 2 s h e r . a f g a n @ i g i . c o m . p k S h a f q a t A l i S h a h

( I S L ) T e l : ( 9 2 - 5 1 ) 2 8 0 2 2 4 3 s h a f q a t . a l i @ i g i . c o m . p k Chaudhry Usman Jav ed (SKT)T

el: (9252) 32426 89usman.j aved@igi. com.pkMu hammad E jaz Rana ( FSD)Tel: ( 92-41)

2540854ejaz. rana@igi. com.pk

International Equity Sales

T a n v i r A b i d , C F A T e l : ( 9 2 -

2 1 ) 5 3 0 1 3 0 4 t a n v i r . a b i d @ i g i . c o m . p k M a n i z e h K a m a l T e l : ( 9 2 2 1 ) 5 3 0 1 7 1 1 m a n

i z e h . k a m a l @ i g i . c o m . p k

Securities

7th Floor, Nacon House, MDM Wafai Road, KarachiPhone: 021-5687494 Fax: 0215684087

Head OfficeBra nch Offices

Karachi 7th Floor, The Forum, Suite No. 701-713, G-

20, Block 9, Khayaban-eJami, Clifton, KarachiPhone 111-234-234 Fax: 111-567567 Karachi - KSE

Room # 123, 3rd Floor, KSE Building, Stock Exchange Road, KarachiPhone 021-2429601 Fax: 0212429607 Lahore

5 F.C.C, Ground Floor, Syed Maratib Ali Road, Gulberg, Lahore Phone: 0425756701, 577861-70 Fax: 042-5762790

Lahore Office # 1, 1st Floor, Y Block, Commercial Market, DHA, LahorePhone: 042-5747810-

14 Fax: 0425747815 Lahore - LSE Room # 302, 3rd Floor, Lahore Stock Exchange Building, 19 Khayaban,

Aiwan-e-Iqbal, LahorePhone: 042-630008285 Fax: 0426311179 Islamabad Mezzanine Floor, Razia Plaza, 90 Blue

Area G-7, IslamabadPhon e: 0512802241-43, 051-111-234234 Fax: 0512802244 Faisalabad

9th Floor, State Life Building, FaisalabadPhon e: 0412540845-43 Fax: 0412540815 Sialkot

Room # 26, Sialkot Trading Floor, 2nd Floor, Cantt Plaza, Allama Iqbal Road, Sialkot CanttPhone: 052-3242689-

92 Fax: 0523242693 Sialkot Office Suite No. 10 & 11, 1st Floor, Soni Square, Khadam Ali Road, Mubarik Pura,

SialkotPhone: 052-3258437 Fax: 0523258438

Pakistan Power Generation Sector

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