Hub Power partners with conglomerate for 50pc stake in Mega Motor

KARACHI: Hub Power Holdings Limited (HPHL), a wholly owned subsidiary of The Hub Power Company Limited (HUBC), has entered into a shareholders’ agreement with Mega Conglomerate (Private) Limited (MCPL), paving the way for MCPL to acquire a 50 per cent stake in Mega Motor Company (Private) Limited, according to a notice filed with the Pakistan Stock Exchange (PSX) on Thursday.

The rationale behind this transaction is “to consolidate the expertise of both HPHL and MCPL and strengthen the business venture with BYD Auto Industry Company Limited”, the notice stated, adding that the agreement is subject to the necessary regulatory approvals and consents.

The partnership marks a significant step in HPHL’s strategy to expand its footprint in the electric vehicle (EV) market, aligning with BYD Auto Industry Company Limited, a global leader in electric vehicles. The deal aims to combine the strengths of both HPHL and MCPL to further solidify the business venture with BYD, with both entities contributing expertise to drive innovation in the sector.

In its note, brokerage firm Arif Habib Limited said that as part of the deal, HPHL and MCPL will jointly own Mega Motor, with each holding a 50 per cent share. Mega Motor has already entered into a supply and manufacturing agreement, as well as a technical licence agreement, with BYD Auto. The company has also signed a distribution agreement in June 2024 to introduce and sell BYD vehicles in Pakistan.

BYD, a publicly listed Chinese multinational, is the world’s largest manufacturer of electric vehicles. The company reported a 73 per cent year-on-year increase in sales in 2023, selling 1.57 million battery electric vehicles (BEVs) and 1.44 million plug-in hybrid vehicles.

Arif Habib Limited further added that the deal could have a positive impact on HUBC’s bottom line. A sensitivity analysis of sales volumes and pricing indicates that HUBC could see an earnings impact ranging from Rs2.1 per share to Rs4.3 per share, assuming annual sales volumes of 5,000 to 10,000 cars at an average price of Rs11.1 million per unit and net margins of 10 per cent. The shareholders’ agreement marks a key milestone in Hub Power’s strategy to diversify its portfolio and capitalise on the growing demand for electric vehicles in Pakistan.