The average target price of QEWS.QA is 20 and suggests 35% upside potential. Usually, this means a BUY recommendation among investment firms, or a recommendation to increase one's position in this instrument in the next 12 months. The most optimistic analyst has a target price of 26.0. This translates into 76% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 18.2. This suggests 23% upside potential. Even the most pessimistic analyst believes there will be stock growth. 

Qatar Electricity & Water Company Q.P.S.C., together with its subsidiaries, develops, owns, and operates plants for the production of electricity and desalinated water in Qatar. The company also invests in electricity and desalinated water projects; and operates and maintains plants. It has an electricity generation capacity of 10,590 megawatts and a water production capacity of 481.5 million gallons of desalinated water. The company was founded in 1990 and is based in Doha, Qatar.

Qatar

Qatar Electricity & Water Company Q.P.S.C.

Utilities

The company has a track record of regular dividend payments. It has paid dividends in each of the past ten years. Dividend per share (DPS) has grown yearly, but the dynamics are unclear. In the past 12 months, the dividend yield has been outstanding and can be rated excellent compared to its peers. At the same time, the average five-year yield has been significantly higher and exceeded nearly all its peers. On average, the company pays dividends annually. 

QEWS.QA reported revenue of QAR 2 992mn in the last 12 months, down 0% from FY24. The dynamics of cash flow, as measure by free cash flow (FCF), were rather similar. EPS fell 2% from FY24 to QAR 1.26. Market expects EPS to reach QAR 1.45 in FY25.

The stock's performance has been mixed in the past six months, with growth following a decline. There is no clear price trend compared to its global peers from the same sector and industry (as shown above). It has underperformed this peer group by 6ppts over six months and grown 3ppts slower in the past month. This is largely true for peers from the same country and sector. With respect to the stock's valuation against its peers, its overall price performance is neutral.

The company has reported very strong EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 53.3% in the last 12 months, a decline from 54.7% in FY23. 

Historically, QEWS.QA has reported very strong net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 46.3%, down from 53.3% in FY23. 

In the last 12 months, the return on capital employed (RoCE) declined to 6.8%, above the peers. The consensus estimate for FY24 for RoCE is 6.3%, however, this time below its peers. 

Qatar Electricity & Water Company Q.P.S.C. reported a return on equity (RoE) of 9.3% in the last 12 months, down from 10.3% in FY23. The market consensus projects an RoE of 10.9% in FY24, again behind its peers. 

Another important profitability metric, return on assets (RoA), amounted to 6.1% in the last 12 months, an increase from 6.1% in FY23. The market analysts predict that RoA will be 6.9% in FY24, again stronger than its peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 1.4 in the past several years. This ratio implies a average shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are close to minimal. In combination with rigorous business standards, shareholder rights are well protected.

QEWS.QA has average trading liquidity. The average private investor can sell his common position in the stock in a single trading day. Liquidity is usually very stable and becomes extremely unfavourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. Another factor to consider is the substantial number of days with zero trading volumes, i.e., without any ability to sell a position. 

No other major risks have been identified.

The risk of default is moderate. We note robust profitability and an favourable capital structure, among the positive credit factors. Among the negative credit factors and we point to slow historical revenue growth, excessive margin volatility.

In highly turbulent market conditions, QEWS.QA is not volatile. In other words, the stock will fall far less than the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be very low. 

In normal market circumstances, QEWS.QA is not volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will stay within a narrow range. The stock's losses on its worst days (less than 1-5% of the time) will range from very low to negligible. 

Considering past and projected metrics, the stock is neither 'expensive' nor 'cheap' compared to its peers. In particular, the stock is reasonably priced on P/E, of fair value on EV/EBITDA, trading at neutral levels on P/FCF. 

Qatar Electricity & Water Company Q.P.S.C.

QAR 14.78

6

Qatar Electricity & Water Company Q.P.S.C.

QAR 14.78

6

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

QAR 14.78

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