Limited short-term triggers. Tabreed’s stock underperformed the DFM by 31.6% y-o-y due to its low beta nature and reduced capacity to distribute dividends after a busy M&A period increased leverage. We see value in the stock, but acknowledge that short-term triggers are not tangible. Possible triggers include value-accretive M&A, or approval to raise the 49% FOL, which could be a precursor for Engie to raise its ownership. Engie paid a 1Y forward EV/EBITDA multiple of 13x for its 40% stake vs. t...
The independent financial analyst theScreener just lowered the general evaluation of NATIONAL CENTRAL (AE), active in the Water industry. As regards its fundamental valuation, the title now shows 1 out of 4 stars while market behaviour can be considered moderately risky. theScreener believes that the title remains under pressure due to the loss of a star(s) and downgrades its general evaluation to Neutral. As of the analysis date April 1, 2022, the closing price was AED 2.46 and its target price...
Full Article at IIR has reaffirmed its Recommended rating for PIA after undertaking a review post the appointment of a new Portfolio Manager, Harding Loevner. The full report can be found on the IIR website. On 26 July 2021, Pengana International Equities Limited (PIA) announced a fully franked dividend of 1.35 cents per share for the June quarter. This represents an 8% increase on the March quarter dividend and takes the total dividends declared for FY21 of 5.1 cents per share, fully franked....
Ultra-stable operations, high earnings visibility priced in. We flag Tabreed as the most defensive name within our UAE coverage, with secured revenues and margins. However, as the district cooling provider currently trades in line with its replacement cost, or at c10x EV/RT*, we cut our recommendation to Neutral, from Overweight. Tabreed trades on a 2020e P/E of c11x, a 17% discount to utility peers, justified, in our view, by its below average 2019-21e EPS CAGR of c6%, notably stemming from its...
Remain OW on valuation, low-risk profile, and growth visibility. We expect Tabreed to grow its EBITDA by 11% y-o-y in 2018. Of this, 5% is from S&T consolidation, while 2% is from 65k RT* of backlog, 50% of which is due in 2H18. New connections, along with an increase in the UAE’s CPI, provide high EBITDA growth visibility. We raise our 12M TP by a marginal 2.3% to AED2.66/share, factoring in further utility price hikes in Abu Dhabi (c55% of capacity), to illustrate that utility price hikes are ...
Tabreed’s Q3 2017 results seem satisfactory. Revenues went up by 7.37% to stand at AED410m vs. AED382m in Q3 2016. However, Tabreed’s net profit (3 months) registered a decrease of 11.9% against a progression of 5.9% over 9 months, increasing from AED273m to AED289m. Q3 2017 EPS stagnated at AED0.04. However, the share of results of associates and joint ventures has fallen from AED32m in Q3 2016 to AED29m in Q3 2017, a decrease of 9.7% but registered an increase of 13.9% in 9 months.
Tabreed announced higher Q2 2017 compared to the previous year. Revenues has increased by 14.2% to attain AED369m vs. AED323m in the same quarter in 2016. Whereas the H1 2017 net profit showed a 17.8% growth, it rose from AED164m to AED193m realized in H1 2016. The EPS was upgraded from 5.9 fils to 7.1 fils. However, share of results of associates and joint ventures has jumped from AED26m in Q2 2016 to AED39m in Q2 2017, an increase of 50%.
Mubadala to convert all MCBs into shares, sell 40% to ENGIE at 13x 2018e EV/EBITDA. As part of the transaction announced today, Mubadala, which currently owns c82% of Tabreed (via equity and MCBs), will be converting all its MCBs into shares, with 1,086mn shares (equivalent to a 40% stake in Tabreed) being transferred to ENGIE [ENGI FP] at AED2.62/share. Mubadala will retain a 42%holding. Although a c42% premium to the 18 Jun-17 closing, the deal price is 6.9% higher than our previous TP, and im...
Reiterate OW at 7% higher TP of AED2.45/share. Tabreed added 64k RT1 in new capacity in 2016 (including a 11.5k RT plant acquisition in Abu Dhabi) and is guiding for another 60k RT in 2017-18, accreting 6% to current capacity. We raise new connections in the UAE to 4% of capacity p.a. (from 2% and vs. guidance of 5%) given 2016 additions. We note that connections need marginal capex vs. a greenfield and, thus, have a more pronounced positive impact on valuation. Tabreed is one of our high-convic...
Ford Equity International Research Reports cover 60 countries with over 30,000 stocks traded on international exchanges. A proprietary quantitative system compares each company to its peers on proven measures of business value, growth characteristics, and investor behavior. Ford's three recommendation ratings buy, hold and sell, represent each stock’s return potential relative to its own country market.. The rating reports which are generated each week, include the fundamental details behind...
Raise TP by c50%, remain Overweight. In Sep-16 Tabreed disclosed that it has signed 81k RT1 of new long-term DC concessions. Alongside its 100k RT backlog, this raises due additions to 18% of its 2Q16 capacity. The new concessions need marginal capex vs. a greenfield. We raise 2016-18e EBITDA by c5% a year, leaving 2017e EV/EBITDA at 10.2x, 26% below EM utilities in spite boasting similar cash flow visibility. New concessions, reduced capex estimates as of 2017 on low spending needed for add-ons...
​We are increasing our TP for Tabreed to AED 2.0 from AED1.76 as a result of increased valuation of associates (Qatarand KSA). We are now more enthusiastic going into FY 17eas we expect either MCB buyback or another major capacityincrease announcement. The MCB buyback could add 29-148% to FY 18e EPS (not in our target price). Buy reiteratedwith 36.4% total return potential including 4.4% individends.
Sell-off contradicts positive developments. With over 100k RT of new DC (district cooling) capacity underway (vs. 2015 additions of 18k RT), we expect bumper EPS growth of 17% y-o-y in 2017, driven by Dubai Parks and Resorts’ DC project (43k RT), due to begin in 3Q16. The sell-off in Tabreed as a result of overall market weakness (c16% from when the Board proposed a 28% MCB buyback) puts the stock on a 2017e fully-diluted P/E of 7.1x. Alongside a stable 5-6% dividend yield, we believe Tabreed ho...
Tabreed is fairly priced. Tabreed’s heavy impairments are now history and dilution risk associated with its mandatory convertible bond (MCB) should diminish with the upcoming buyback decision due. Nevertheless, we see limited upside to Tabreed’s share price because its high debt leaves it open to rising interest rates through to 2021, when it has a bullet payment to settle equivalent to AED0.33/share.
The MCB buyback is significant and should push the stock if approved. Tabreed’s shareholders will consider in its 7 June EGM whether to buy back 28% of its mandatory convertible bond (MCB), a move likely to trigger a price rally. Aside from the resultant cancellation of shares, in our view, the buyback signals Tabreed’s interest to protect minority investor rights. Mubadala’s 2010 issue ofthe AED3.1bn MCB was followed with sporadic conversion, the most recent of which occurred in June 2014.
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