Gulf News - UAE fuel retailer ADNOC Distribution's entry in MSCI Emerging Market Index is right exposure

Vijay Valecha, Special to Gulf News May 21, 2021

The largest UAE fuel retailer ADNOC Distribution's inclusion in the MSCI Emerging Market Index could increase the attractiveness of its shares to potential overseas investors and further diversify the investor base. With $31.56 billion in assets, the company joins nine other UAE-listed companies that are part of the index with an estimated weightage of 0.04 per cent.

Asset management firms, foreign pension funds and sovereign wealth funds usually use indices such as the MSCI EM Index as part of their globe-spanning passive investment strategy. Adding ADNOC into that universe could attract significant foreign institutional interest.

ADNOC Distribution’s current market capitalization stands at Dh60.37 billion, and in the second-half of 2020, it successfully completed a private placement valued at $1 billion to institutional investors, increasing its free-floating equity to 20 per cent and contributing to improved liquidity of its shares.

Pre-COVID numbers

The first quarter 2021 revenue was at Dh4.28 billion, the best in the last four quarters and suggesting that the recovery for the company has possibly begun, although it is down by 13.3% compared to Q1-2020. With UAE being at the forefront of the vaccination programme, potentially resulting in a pickup for economic activity, revenues could get a boost to pre- pandemic levels.

The EBITDA for Q1-2021 was Dh817 million, which is up 46.8 per cent over first quarter 2020 due to the rise of corporate fuel volumes, improved margins as well as lower operating cost. Net earnings were Dh631 million, up by 57.9 per cent compared to same quarter last year, largely as a consequence of the higher EBITDA.

The largest UAE fuel retailer ADNOC Distribution's inclusion in the MSCI Emerging Market Index could increase the attractiveness of its shares to potential overseas investors and further diversify the investor base. With $31.56 billion in assets, the company joins nine other UAE-listed companies that are part of the index with an estimated weightage of 0.04 per cent.

Asset management firms, foreign pension funds and sovereign wealth funds usually use indices such as the MSCI EM Index as part of their globe-spanning passive investment strategy. Adding ADNOC into that universe could attract significant foreign institutional interest.

ADNOC Distribution’s current market capitalization stands at Dh60.37 billion, and in the second-half of 2020, it successfully completed a private placement valued at $1 billion to institutional investors, increasing its free-floating equity to 20 per cent and contributing to improved liquidity of its shares.

Pre-COVID numbers

The first quarter 2021 revenue was at Dh4.28 billion, the best in the last four quarters and suggesting that the recovery for the company has possibly begun, although it is down by 13.3% compared to Q1-2020. With UAE being at the forefront of the vaccination programme, potentially resulting in a pickup for economic activity, revenues could get a boost to pre- pandemic levels.

The EBITDA for Q1-2021 was Dh817 million, which is up 46.8 per cent over first quarter 2020 due to the rise of corporate fuel volumes, improved margins as well as lower operating cost. Net earnings were Dh631 million, up by 57.9 per cent compared to same quarter last year, largely as a consequence of the higher EBITDA.

Source:
Gulf News