04-05-2025
Nakilat outlook remains bright on strong Q1 results: QNBFS
Satyendra Pathak
Doha
Qatar Gas Transport Company Limited (Nakilat, ticker: QGTS) reported a robust first quarter for 2025, surpassing market expectations across several financial and operational indicators, QNB Financial Services (QNBFS) said in a report released recently.
According to the report, the results were driven by stronger-than-expected performance from wholly owned vessels, improved margins, and lower finance costs, which more than compensated for a minor shortfall in joint venture income. These results reaffirm Nakilat's reputation as a key growth story in Qatar's LNG value chain.
Nakilat's net profit for the first quarter of 2025 rose 3.2 percent year-on-year and 19.7 percent quarter-on-quarter to QR433.2 million, translating to earnings per share of QR0.078. This figure outperformed QNBFS's estimate of QR403.3 million by 7.4 percent. Revenue from wholly owned ships came in at QR908.6 million, modestly above the forecast, while EBITDA reached QR721.3 million—4 percent higher than expectations—supported by lower cash operating costs and improved gross margins.
General and administrative expenses were significantly lower than expected at QR18.8 million, aided by efficient expense management and timing-related factors. Depreciation costs of QR212.1 million were in line with estimates, with QNBFS reminding investors that Nakilat's vessels are currently in a dry-docking cycle that began in 2023. Importantly, long-term time-charter agreements absorb dry-dock days, ensuring stable revenue generation.
Although joint venture income of QR156.6 million fell short of expectations due to softer spot markets, QNBFS notes that Nakilat's limited exposure to spot rates offers a degree of protection. Moreover, management anticipates a rebound in the shipyard segment toward the end of 2025, with stronger momentum projected in 2026 and beyond.
Finance costs decreased to QR258 million, 4.8 percent below forecasts, owing to loan repayments and refinancing at favorable rates. Meanwhile, interest and dividend income outperformed expectations, though lower year-on-year due to capital reallocation toward the fleet expansion program.
QNBFS highlights Nakilat's central role in Qatar's LNG expansion strategy. The company has already secured contracts for 25 new conventional LNG carriers and 9 QC-Max vessels—comprising 27 percent of QatarEnergy's total fleet expansion. This development, according to QNBFS, supports a potential 60 percent uplift in Nakilat's earnings from 2026 to 2031. Deliveries and capital spending will accelerate from 2026, peaking in 2027, and continue through 2031. QNBFS plans to update its earnings model once further details on capital expenditures, charter rates, and financing structure become available.
QNBFS reiterates its outperform rating on Nakilat, with a target price of QR5.600. At current valuation levels, QGTS represents one of the most attractive long-term investment opportunities in Qatar's energy sector. Its stable, long-term cash flows, strategic LNG exposure, and disciplined capital management make it a compelling choice for equity investors.
QNBFS cautions that execution risks remain given the scale of the fleet expansion. However, Nakilat's operational track record and strong alignment with state-owned QatarEnergy reduce this risk significantly. The company's robust financial footing and long-term charter arrangements offer further insulation from market volatility.
