QNBFS remains ‘accumulate’ on QEWC with PT of QR17

QNB Financial Services (QNBFS) on Monday said that it remains ‘accumulate’ on Qatar Electricity and Water Company (QEWC) with a QR17 price target for now.
In a company report released on Monday, QNBFS said, “We continue to like the company as a long-term play with a relatively defensive business model, especially in light of current market conditions. The near-term impact of the COVID-19 pandemic remains muted on QEWC’s business model as the company is paid based on power and water availability and is not affected by the vagaries of end demand.”
“QEWC still enjoys decent EBITDA margins, dividend and FCF yields. As expected, the UAH water expansion (61.45 MIGD) was commissioned during the first quarter of 2021. LT catalysts that are not in our model abound, including additional domestic expansions like Facility E in 2024-2025 and others. Nebras remains on the hunt for growth,” the report said.
“QEWS reported net income of QR291.9 million for the fourth quarter of 2021, up 136.5 percent YoY but down 25.4 percent QoQ, below our estimate of QR311.2 million, while overall top-line was right in-line with our estimate and margins gained against our modelled expectations, the downside in JV income reduced earnings, relative to our expectations, for the quarter,” the report said.
“Total revenue including power, water and lease interest of QR634.5 million in the fourth quarter of 2021 was in line with our forecast of QR631.6 million. We note that 4Q2021 top-line stabilised on a YoY basis after declining for two consecutive quarters YoY,” it said.
“DPS was stronger than our estimate at QR0.80 in 2021 against QR0.63 in 2020. We were expecting QR0.775 in DPS for 2021, which would have been in line with the DPS for 2019. The dividend yield is a fairly decent 4.5 percent,” it said.