Dana Gas PJSC rallied the most in almost 11 months on bets the United Arab Emirates fuel producer’s $920 million Islamic bond restructuring will spur profit growth.
The shares advanced 7.5 percent, the most since Jan. 18, to 43 fils at the close in Abu Dhabi. The company was the second-biggest gainer in Abu Dhabi’s ADX General Index today, as 83 million Dana Gas shares were traded, almost eight times the 12-month daily average. The company yesterday had its price estimate raised 55 percent to 87 fils at EFG-Hermes Holding SAE after the debt revamp announcement. The investment bank maintained a buy rating on the stock.
Dana Gas shares dropped 4.4 percent this year on concern the natural gas supplier may default, compared with a 9 percent gain for the benchmark ADX General Index. The company, which was forced to restructure the debt after political instability in Egypt and Iraq’s Kurdish region led to payment delays, will pay bondholders $70 million in cash and split the remaining Shariah-compliant debt into $425 million tranches of convertible bonds and ordinary sukuk, it said yesterday.
“In the wake of this successful restructuring process with creditors, we believe the company can now refocus on operations in Egypt and Kurdistan,” EFG-Hermes said in a note. The bank expects the company to post a 30 percent increase in 2013 profit as it anticipates “the market to recognize Dana Gas’s underlying value.”
The gas producer, which is based in the U.A.E. emirate of Sharjah, may post 12 percent growth in 2012 net income to 565 million dirhams ($154 million), according to the average estimate of five analysts on Bloomberg, after posting profit increases in the previous two years. Dana Gas’s shares are undervalued and are worth 90 fils, Exotix Ltd. said today, placing a buy rating on the stock. The company was the most-traded in the Gulf Cooperation Council so far today, according to the Bloomberg GCC 200 Index.
Four analysts have a buy rating on the stock, while two have the stock on hold, according to data compiled by Bloomberg. Dana Gas has an estimated price-to-earnings ratio of 5.6 times, compared with 8.4 times for the ADX. The company’s debt-to-equity ratio is 22 percent, compared with 121 percent for Comstock Resources Inc., the Frisco, Texas-based oil and natural-gas producer.