Qatari gas shipper feels the pinch

Sailing in a market that is low on liquidity and confidence

Qatar Gas Transport may have a solid long-term future but it is being punished for being in a market that is low on liquidity and confidence at the moment. More commonly known as Nakilat, the company ships liquefied gas and provides shipping services across the globe. Its shares yesterday hit the second 52-week low this month, closing 1 per cent lower at 18.80 rials, 10 fils below its June 10 low of 18.90 rials.

The shares are down more than 28 per cent from their peak in September last year and are down almost 22 per cent this year. Analysts say a shift in global demand is making investors nervous about investing in Nakilat shares. The European markets have increased their own production capacity and the gas-shipping companies such as Nakilat are being forced to look towards Asia instead. The stock's fall "is a combination of many things: volatility in oil prices; a lack of demand for commodities in general, including gas; and the drop in shipping indexes are all contributing factors", said Yazan Abdeen, a fund manager at ING Investment Management in Dubai.

Nakilat, Mr Abdeen said, was a "long-term reward story" but it was trading in a market that was facing a dearth of liquidity, where sharp drops in prices were frequent. The company is highly leveraged, with a debt-to-equity ratio of more than 200 per cent but it produced solid first quarter earnings. Its net profit more than tripled to 163.4 million rials, from 54.1m rials a year earlier. "There are lots of factors driving growth and the company has earnings visibility with long-term contracts for shipping gas," said Angad Rajpal, a senior analyst at Prime Securities in Abu Dhabi.

Mr Rajpal is among analysts who think despite the recent decline in stocks, Nakilat serves as a vital link between Qatar's upstream gasfields and its geographically diverse clients. [e-mail]