QNBFS remains bullish on Milaha in longer-term

QNB Financial Services (QNBFS) has announced that it remains bullish longer-term on the Milaha growth story.
In a company report published recently, QNBFS said, ‘‘Over the period of 2011-2021, Milaha has always traded at a significant discount to its sum-of-the-parts, sometimes worth only the value of its investment stake in Nakilat and its equity and bond portfolio. This remains the case currently, with Milaha’s “non-core” assets along with its net cash position, making up more than 100 percent of the company’s market cap. This implies that investors get Milaha’s ‘core’ or operating businesses for almost free.’’
However, the report said, ‘‘What could be different this time around is that Milaha should enjoy several catalysts, which could help in its rerating. We note recovery in oil prices, the lifting of Qatar’s blockade, the upcoming FIFA World Cup Qatar 2022 and the massive North Field Expansion project are all positive tailwinds. Easing of COVID-19 restrictions should also contribute to easier comparisons going forward. Lack of large impairments in the future should also help Nakilat’s earnings trajectory and highlight its growth story to investors. We rate Milaha an outperform with a QR10 price target.’’
Commenting on Milaha’s first-quarter results announced recently, it said, ‘‘Milaha posted earnings of QR360.4 million in the first quarter of 2022, which was up 21.3 percent YoY and 415.9 percent QoQ. Reported earnings were in-line with our estimate of QR352.2 million. We note Milaha usually benefits from significant dividend income in the March quarter generally leading to sizable QoQ earnings growth. Relative to our model, all segments excluding Milaha Capital posted moderately better-than-expected earnings.’’
Better-than-expected performance from Milaha Gas and Petrochem, Milaha Maritime & Logistics and Milaha Offshore were key drivers of earnings growth, it said.