TAQA: Q2 profit up 21.7%, but net debt rose AED 3.6bn over the year

25 августа TAQA раскрыла результаты за второй квартал 2026 года: выручка снизилась на 2,4% до 13 788 млн AED, а чистая прибыль выросла на 21,7% до 1 980 млн AED. Рентабельность по чистой прибыли расширилась с 11,5% до 14,4%. При текущей цене акции выглядят скорее привлекательно: мультипликатор P/E 49,9 выше собственной истории, но рост прибыли и стабильный операционный поток поддерживают оценку.

Key takeaways

— Выручка во втором квартале снизилась на 2,4% год к году, до 13 788 млн AED

— Чистая прибыль выросла на 21,7% благодаря расширению маржинальности

— Операционный денежный поток за квартал составил 3 523 млн AED, но капзатраты выросли до 2 976 млн AED

— Чистый долг увеличился на 9,9 млрд AED за квартал и на 3,6 млрд AED за год

— Дивидендная доходность остается умеренной, выплаты подкреплены операционным потоком

— P/E 49,9 — выше среднего за три года, но прибыль растёт двузначными темпами

Attractiveness

Key figures, AED bn

Q2 revenue fell 2.4% YoY to AED 13,788 million

In Q2 2026, TAQA's revenue was AED 13,788 million, down 2.4% from the same quarter a year earlier. The decline continues the trend that began in Q4 2025, when revenue fell 9.0% YoY. In Q1 2026, the drop was slightly deeper at 2.7%.

The revenue decline likely reflects weaker energy prices and lower demand in some segments, but the company does not disclose segment details. Nevertheless, the pace of decline slowed from the previous quarter, which may indicate stabilization.

Net profit rose 21.7% on margin expansion

Net profit for Q2 2026 was AED 1,980 million, up 21.7% from a year earlier. Net margin expanded from 11.5% to 14.4% – the best in the last four quarters. In the previous quarter (Q1 2026), the margin was 15.2%, but that profit included one-off items.

Profit growth despite lower revenue suggests either lower operating expenses or one-off gains. The report does not disclose the structure, but operating profit in Q1 2026 was AED 2,735 million, indicating healthy operational dynamics.

Operating cash flow was AED 3,523 million in Q2, but capex rose to AED 2,976 million

In Q2 2026, TAQA's operating cash flow was AED 3,523 million, down 26.2% from AED 4,774 million a year earlier. Capital expenditure rose to AED 2,976 million from AED 2,419 million. Free cash flow thus fell to AED 547 million – the lowest in the last four quarters.

Lower operating cash flow and higher capex mean the company is investing in expansion but generating less cash to cover debt and dividends. In Q1 2026, operating cash flow was much higher at AED 7,009 million, indicating quarterly volatility.

Net debt rose AED 9.9 billion in Q2 and AED 3.6 billion over the year

At the end of Q2 2026, TAQA's net debt was AED 59,273 million, up AED 9,852 million from AED 49,421 million at the end of Q1. Over the last 12 months, debt rose AED 3,616 million from AED 55,657 million in Q2 2025.

The quarterly increase likely reflects funding of capital expenditure and possible acquisitions, but the company does not disclose details. Debt remains high, but operating cash flow of AED 19,100 million over the last 12 months provides comfortable interest coverage.

Dividend yield remains moderate, payments backed by operating cash flow

TAQA pays dividends twice a year. The last payment was for H1 2025, but exact amounts are not disclosed in the report. For 2025, the company paid dividends in line with its policy of distributing at least 75% of distributable profit.

At the current market cap of AED 299,075 million and net profit of AED 5,989 million over the last 12 months, the dividend yield is about 1.5% – below the market average but consistent with the stability of the utility sector. Operating cash flow of AED 19,100 million over the last 12 months comfortably covers both capex and dividend payments.

We expect the 2026 dividend to be close to last year's level unless there is a significant deterioration in operating performance. The main risk to payments is rising debt and higher interest expenses.

P/E of 49.9 is above its three-year average, but profit is growing at double-digit rates

TAQA's current P/E is 49.9, above its three-year average. However, this multiple is partly justified by profit growth: net profit rose 21.7% YoY in Q2 2026. Return on equity is 7.4%, below the cost of capital but typical for a capital-intensive sector.

Comparison with its own history shows the stock trades at a premium to its average, limiting upside potential. Nevertheless, stable operating cash flow and moderate debt (net debt / EBITDA around 3.1, using EBITDA over the last 12 months) support the valuation.

We believe a fair P/E for TAQA is in the range of 40-45, given slowing revenue and high capex. The current level of 49.9 suggests the market is pricing in acceleration that is not yet visible in the results.

Valuation on the latest reported figures

Bottom line

In summary, TAQA showed strong net profit growth of 21.7% in Q2, but this was achieved against declining revenue and may include one-off items. Operating cash flow remains positive, but its level is insufficient to cover rising capex and debt growth. The dividend yield is moderate, and payments are likely to continue, but rising debt may limit increases. At a P/E of 49.9, the stock trades above its own history, making it rather attractive, but not more. A change to 'attractive' would require sustained revenue growth and lower debt.