Qatar Electricity & Water Co. - 4Q11 Results

·        Total revenues grew by 4.1% YoY and declined 7.3% QoQ to QAR1,130.0mn

·        Gross Profit grew by 5.2% YoY while declined by 12.3% QoQ to QAR510.3mn

·          Net profit att. to equity holders of the parent co. declined by 22.9% YoY & 32.5% QoQ to QAR253.1mn

·          Profitability for the quarter hit by liquidated damages paid to KAHRAMMA

Analyst comments:

In 2011, QEWC recorded consolidated revenues of QAR4,473.2mn (variance of 0.4% from our est.), reported a YoY growth of 30.4%. The gross profit reached QAR2,167.0mn (variance of -0.9% from our est.) for 2011, grew by 40.8% YoY, with gross margin of 48.4% (went up from 44.9% in 2010). The net profit att. to equity holders of the parent co. in 2011 was at QAR1,299.7mn (variance of -6.8% from our est.), registered a YoY growth of 8.5%. In this quarter there was an expense of QAR54.1mn for liquidated damages to KAHRAMMA regarding  RAF-A stations for not achieving the required level of electricity availability during the year, which was not expected and led to a deviation from our profit forecast for 2011. Among the major cost components, general & admn. expenses grew by 34.9% YoY to QAR201.1mn and finance cost increased by 56.8% YoY to QAR730.7mn.

QEWC is one of the direct beneficiaries of exponential growth the country is witnessing. The company has several large scale projects under its belt in Qatar and is also expanding its portfolio of international power stations. Recently, QEWC has entered into an agreement with IDB Infrastructure Fund L.P, Bahrain, to purchase 38.89% stake in AES Oasis Ltd, a company incorporated in Cayman Islands. AES Oasis L.T.D is 60% owner of AES Jordan Holding Co., a joint venture with Mitsui & Co Ltd of Japan, which owns and operates a 370MW combined cycle gas fired power in Almanakher, Jordan. The effective stake of QEWC in this plant is 23.33%.