ADNOC Distribution: pumped for growth (BUY - initiation of coverage)
We initiate coverage of the Abu Dhabi National Oil Company for Distribution (ADNOC Distribution) with a BUY rating and a 12-month price target (PT) of 5.16 UAE dirham (AED), offering 18% upside. ADNOC Distribution is an Abu Dhabi based petrol marketing company, with retail sites across the United Arab Emirates (UAE), the Kingdom of Saudi Arabia (KSA) and, pending an ongoing deal, in Egypt. The business enjoys strong margins in the UAE, where its market share is >60%. It also has a successful convenience store (CVS) business, which we view as a major advantage in its expansion strategy. The Saudi market is a hugely fragmented one, where we believe that a company with a strong business model can grow strongly for years to come. ADNOC Distribution has a dividend policy of paying out at least 75% of net earnings from 2023E-onwards. We expect a P/E of 17.3x for 2022E and 15.0x for 2024E, which is similar to both its peers and its own historic levels.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
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