QNB Financial Services has raised the target price of Qatar Gas Transport Co. (Nakilat) stock to 4.10 Qatari riyals ($1.12) from 3.90 riyals and maintained an ‘accumulate’ rating as it expects the transporter to become a beneficiary of Qatar’s massive LNG expansion program.

The brokerage estimates that every incremental vessel contracted adds approximately 1 percent to QGTS’ target price, while an “award of 20-30 ships could significantly increase our price target and estimates”.

Qatar, the world’s largest gas exporter, is undertaking a $30 billion North Field Expansion (NFE) which includes plans to add six LNG trains, ramping up production by 64 percent in the next five years.

Nakilat, which has the largest LNG carrier fleet, is part-owned by state-owned Qatar Energy and other government funds. Qatar Energy has initiated the tender awards process to ship owners for the charter of LNG carriers for NFE and contracts are likely to be awarded by year-end or in H-2023.

QNB, which remains bullish on Nakilat, said it is the best avenue for equity investors to participate in the long-term growth expected in Qatar’s LNG sector.

“Irrespective of the volatility of the LNG shipping market, Nakilat’s business should remain relatively unaffected given the LT nature of its charters. QGTS’ fleet continues to provide Nakilat with stable, contractually sustainable cash flow that allow for a healthy residual income stream for equity investors after providing for debt service.”
Source: Reuters (Reporting by Brinda Darasha; editing by Daniel Luiz)