THE COUNTRY OF GAS
Possessing 13.8% of the earth’s proven natural gas (NG) reserves, Qatar is the biggest NG exporter in the world. Currently, Qatar does not use underground pipelines to transport NG. It uses floating pipelines: vessels, mainly those of Nakilat.

LARGEST LNG TRANSPORTATION COMPANY
With an expected 2010 Liquefied Natural Gas (LNG) fleet of 54 vessels, Qatar Gas Transport Company, commonly known as Nakilat, will be the largest LNG transportation company in the world, with a market share of more than 17%.

TRANSPORTING HALF OF THE QATARI LPG
In addition to its LNG fleet, Nakilat has four Liquefied Petroleum Gas (LPG) vessels and aims to quadruple its fleet in order to be able to transport half of the Qatari LPG production, expected to be 12 million tons in 2014.

STABLE CASH FLOW
All the LNG vessels are long-term chartered, and so they generate stable revenues. In addition, Nakilat entered into derivatives contracts to fix the interest expenses on its QAR 23 billion debt, resulting in lower risk.

REVENUES STARTING TO BE RECORDED
As Nakilat starts to receive its vessels, operating revenues will be recognized as we go forward. Vessels are still partly operated, and so they contributed only a small portion of the company’s revenues in the past quarters. However, quarterly revenues are expected to increase gradually till 2010, when the company’s fleet will be fully operated.

UNDERVALUED STOCK
Nakilat is currently traded at a trailing PE of 51.45. However, we expect a PE 09 of 24.61 and PE 10 of 10.08.

Based on our valuation, we estimate a fair value of QAR 44.35, indicating an upside potential of 75%.