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Satyendra Pathak
Doha
Qatar Airways’ planned fleet expansion of more than 300 aircraft is a major growth opportunity for Qatar Fuel Company (Woqod), QNB Financial Services (QNBFS) has said in its latest report.
“Jet Fuel A1 is the major product of Woqod, accounting for 49.7 percent of total fuel sold as of the first half of 2019. Woqod mainly supplies its jet fuel to Qatar Airways and as a result, Qatar Airways’ expansion plans directly influence Woqod’s future top and bottom line growth,” the report said.
According to its 2019 annual report, Qatar Airways has an order of over 300 aircraft worth more than $85 billion including options and letters of intent. Qatar Airways Group has already posted significant growth, increasing its number of aircraft to 250 by March 2019 from 159 in 2015.
QNBFS, which has initiated the coverage of Woqod with ‘market perform’ rating, said Woqod’s Jet fuel sales grew the fastest among the company’s major products.
Woqod’s jet fuel sales volume grew by 7.2 percent year-on-year (YoY) to 2.52bnLt as of the first half of 2019.
Expansion of Qatar’s LNG output by 43 percent from 77mpta to 110mpta through the North Field expansion project may also become a significant driver for Woqod’s bunkering business in the long term, the report said.
In order to support the planned production growth, Qatar Petroleum initiated a major LNG ship-building campaign in April this year, which is expected to deliver 60 LNG carriers with a potential to exceed 100 new LNG carriers over the next 10 years.
Qatar’s population growth of 2.4 percent per annum coupled with Qatar’s highest GDP per capita in the world provides a lucrative backdrop for Woqod’s expanding retail fuel and nonfuel businesses such as retail shops, auto care and vehicle inspection services, the report said.
Woqod is in the process of doubling its number of gas stations by the end of 2019 against 2017, which should support both fuel and non-fuel revenue.
The company opened 32 petrol stations in 2018 and is expected to open 30 fixed stations in 2019 bringing the total number of stations to 114 against 52 as of 2017.
Furthermore, Woqod signed a MoU with Al Meera for the management of Woqod’s Sidra convenience stores.
“We think Al Meera’s retail experience and wholesale purchasing power could help ramp up the revenue growth and profit margins of Sidra stores, thereby further bolstering Woqod’s non-fuel revenue growth,” the report said.
Strong balance sheet should allow the company to finance its future growth and create room for a possible dividend yield enhancement.
As of the first half of 2019, the report said, Woqod has a cash position of QR4 billion with no financial debt plus a QR1.52 billion in investment securities portfolio invested in
listed Qatari stocks.
“Woqod’s net cash and investment securities portfolio accounts for 70.8 percent of its shareholders’ equity,” the report said.
“We rate Woqod as ‘market perform’ and our 12-month target price of QR23.40 implies a 1.3 percent upside potential,” the report said.
Doha
Qatar Airways’ planned fleet expansion of more than 300 aircraft is a major growth opportunity for Qatar Fuel Company (Woqod), QNB Financial Services (QNBFS) has said in its latest report.
“Jet Fuel A1 is the major product of Woqod, accounting for 49.7 percent of total fuel sold as of the first half of 2019. Woqod mainly supplies its jet fuel to Qatar Airways and as a result, Qatar Airways’ expansion plans directly influence Woqod’s future top and bottom line growth,” the report said.
According to its 2019 annual report, Qatar Airways has an order of over 300 aircraft worth more than $85 billion including options and letters of intent. Qatar Airways Group has already posted significant growth, increasing its number of aircraft to 250 by March 2019 from 159 in 2015.
QNBFS, which has initiated the coverage of Woqod with ‘market perform’ rating, said Woqod’s Jet fuel sales grew the fastest among the company’s major products.
Woqod’s jet fuel sales volume grew by 7.2 percent year-on-year (YoY) to 2.52bnLt as of the first half of 2019.
Expansion of Qatar’s LNG output by 43 percent from 77mpta to 110mpta through the North Field expansion project may also become a significant driver for Woqod’s bunkering business in the long term, the report said.
In order to support the planned production growth, Qatar Petroleum initiated a major LNG ship-building campaign in April this year, which is expected to deliver 60 LNG carriers with a potential to exceed 100 new LNG carriers over the next 10 years.
Qatar’s population growth of 2.4 percent per annum coupled with Qatar’s highest GDP per capita in the world provides a lucrative backdrop for Woqod’s expanding retail fuel and nonfuel businesses such as retail shops, auto care and vehicle inspection services, the report said.
Woqod is in the process of doubling its number of gas stations by the end of 2019 against 2017, which should support both fuel and non-fuel revenue.
The company opened 32 petrol stations in 2018 and is expected to open 30 fixed stations in 2019 bringing the total number of stations to 114 against 52 as of 2017.
Furthermore, Woqod signed a MoU with Al Meera for the management of Woqod’s Sidra convenience stores.
“We think Al Meera’s retail experience and wholesale purchasing power could help ramp up the revenue growth and profit margins of Sidra stores, thereby further bolstering Woqod’s non-fuel revenue growth,” the report said.
Strong balance sheet should allow the company to finance its future growth and create room for a possible dividend yield enhancement.
As of the first half of 2019, the report said, Woqod has a cash position of QR4 billion with no financial debt plus a QR1.52 billion in investment securities portfolio invested in
listed Qatari stocks.
“Woqod’s net cash and investment securities portfolio accounts for 70.8 percent of its shareholders’ equity,” the report said.
“We rate Woqod as ‘market perform’ and our 12-month target price of QR23.40 implies a 1.3 percent upside potential,” the report said.
