Subdued operational performance
TAQA registered subdued operational performance for 4Q22 whereby its revenue stood at AED 10844mn which is a decline of 5% YoY basis and 21% on QoQ basis, and below our estimate of AED 14193 mainly because of lower contributions from Transmission & Distribution business and Generation Business, despite Oil & Gas business contributing positively amid improvement in commodity prices.
Gross and operating profits declined amid increased fixed and variable costs
Rise in operating expenses in Transmission & Distribution business, Generation business, and Oil & Gas business led to a decline in gross profit and operating profit to AED 2410mn and AED 1670mn against our estimates of AED 3732 and AED 3251, respectively. The group witnessed higher BST pass-through costs, higher fuel pass-through costs and higher fuel and emission trading costs that dove operating expenses higher over the period.
Net profit fell by 38% QoQ, below estimate
The subdued operational performance had a negative bearing on the net profit of the group during the quarter. It reported a net profit of AED 1452 for the quarter against our estimate of AED 3059mn. The net profit was also impacted by an increase in the current tax charge owing to higher taxable profits and the introduction of windfall taxes in Europe.
Maintain target price
The mixed earnings reported by various businesses of the group whereby T&D and Generations businesses contributed to reduction and the Oil & Gas business contributed an increase in the net income under an improved commodity price environment. However, commodity prices remain volatile, and hence we maintain our target price.