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Oman's Ubhar Capital Research has initiated coverage of Abu Dhabi Securities Exchange-listed ADNOC Gas with an 'Accumulate' rating to the stock, and a target price of AED 3.7, ($1) reflecting 14% potential upside from the current levels.
Since listing in March 2023 the share price touched an all-time high of AED 3.710, with 56% upside. But since August 2023, the share price has been declining, down 16% from its high as of January 29, 2024. "We anticipate that the stock to bounce back considering the company’s new EPC contracts and LNG agreements in key markets, thereby fostering expansion for the business," Ubhar Capital said in a note on Monday. The stock is currently trading at a P/E of 14.7x based on 2024 estimates, compared to its historical average one-year forward P/E of 15.9x.
Among other positives for the stock are: Benefits from UAE Government’s planned investments of $17 billion aimed at production of 1.5 billion standard cubic feet per day (bscfd) of gas by 2030; procures feedstock directly from parent thereby mitigating supply risk and bears very limited upstream development risk; low debt-equity profile with attractive yield and payout.
(Writing by Brinda Darasha; editing by Seban Scaria)
