The average target price of QEWS.QA is 19 and suggests 30% 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 22.5. This translates into 50% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 17.4. This suggests 16% 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.

Over the last six months, the stock performance has varied, with an increase following a drop. When measured against its worldwide peers from the same industry (as shown above), the stock has been weaker, underperforming by 7ppts. There is a distinction between the stock's performance and that of its peers from the same country and industry. Over six months its performance trailed that of this peer group by 0ppts and its growth decelerated by 0ppts in the previous month. Given the stock's valuation versus its peers, its total price movement is neither favourable nor unfavourable.

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. 

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. 

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. 

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. 

Based on key historical and expected multiples, the stock is fairly valued relative to its peers. Specifically, the stock is fairly valued on P/E, neutral on EV/EBITDA, reasonably priced on P/FCF. 

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

QAR 15.06

6

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

QAR 15.06

6

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

QAR 15.06

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