PHOTO
FAB Securities has maintained its 'Buy' rating on ADNOC Drilling stock with a revised target price of 3.90 dirhams ($1.06) up from 3.60 dirhams earlier, based on its robust cash flow generation and higher than estimated Q1 2022 financial performance.
ADNOC Drilling’s Q1 2022 net profit rose 59 percent YoY to $174 million, higher than FAB estimate of $160 million.
In a note on Wednesday, the Abu Dhabi-based financial services firm said ADNOC Drilling is on a growth path, expanding its rig fleet and offshore segment offering in the short to medium term, which is expected to add to the revenue growth.
The company is generating sustainable free cash flow (FCF), which as a percentage of revenue stood at 89 percent in 1Q22. This would allow ADNOC Drilling to be able to distribute healthy dividends even after providing for growth opportunities. It is expected to generate a dividend yield of 4.8 percent based on FY2022 dividend.
(Reporting by Brinda Darasha; editing by Daniel Luiz)
