We use a sum-of-the-parts approach to derive our target price of AED 6.0. We use DCF (WACC of 8.8% and long-term GDP growth of 2% for terminal value) for the Integrated Logistics segment, which implies a valuation of c9x EV/EBITDA, and peer EV/EBITDA multiples for Shipping and Marine Services, which are 7.8x (largely due to a high multiple for Gas segment) and 12x, respectively.

The key risks we see to the investment thesis and the achievement of our target price are: 

The company generates c.70% of revenue from a single customer – the parent company ADNOC.

A fully operational Etihad Rail might provide an alternative mode of transport for moving Borouge cargo from the warehouse to the Khalifa port terminal.

Near-term spot rate movements will impact earnings in the shipping segment. 

Potential demand shocks on oil and gas would result in lower volumes and excess capacity in the near-term.

Early termination or non-renewal of existing contracts.