ADNOC Distribution (ADNOCDIS UH) Upgrade to Buy: Positive cash generation phase

Research evidence excerpt

ADNOC Distribution (ADNOCDIS UH) Upgrade to Buy: Positive cash generation phase

rt near-term fuel demand, while UAE’s recent exit

from OPEC could imply positive mid-term upside risks, especially in a scenario of 4.60

rapid oil output ramp up and continued investments in oil capacity expansion, 3.95

including diesel-intensive shale oil and gas projects. 3.30

05/25 11/25 05/26

Sustained positive FCF phase is still a realistic scenario. In 2025, the company Target price: 4.40 High: 4.13 Low: 3.47 Current: 3.85

fully covered its capex and dividend for the first time since 2019. There is a chance

Source: LSEG IBES, HSBC estimates

that this trend continues in 2026, not least thanks to likely strong inventory gains.

A large outstanding payable to the parent company remains a risk for FCF, but the Ildar Khaziev*, CFA

respective repayments have been lower than what we expected over the past few Senior EM Oil & Gas and Utilities Analyst

HSBC Bank plc

quarters. Yes, the mid-term retail volume growth trajectory remains unclear, but a ildar.khaziev@hsbc.com

negative volume scenario could moderate the company’s appetite for network +44 20 7992 3302

expansion investments and support its FCF. This could ultimately lead to stronger Ankur Agarwal*, CFA

Senior Analyst, MENA Consumer, TMT & Transport

dividends, especially in a scenario where the company continues to expand HSBC Bank Middle East Limited, Dubai branch

inorganically (Bloomberg reported on 14-Apr-26 that ADNOC Distribution was in ankurpagarwal@hsbc.com

+971 4 423 6558

advanced talks with respect to a possible acquisition of a 600-station network in

Kaushik Gopalakrishnan*

South Africa valued at cUSD1.0bn). Associate

Bangalore

Raise TP to AED4.40 (AED4.20), upgrade to Buy (from Hold). With this note, we