DEWA and Empower together will be making shareholders quite content with their returns. Image Credit: Ahmed Ramzan/ Gulf News

Dubai’s DEWA now has a market cap of Dh124 billion and a financial profile with excellent visibility of cash flow and shareholder returns. The company’s performance is directly tied to the local economy’s prospects, forecast to grow at above 5 per cent in 2022, supported by continued domestic demand, a robust tourism sector, solid business ecosystem and continued emphasis on infrastructure projects.

Into this mix comes the Empower IPO to boost DEWA’s prospects further, which has majority ownership in the world’s largest district cooling service provider. Empower is set for a November 16 listing and thus joins DEWA, Tecom and Salik. These also serve as a testament to the health of the economy and strong demand for high-quality paper from the emirate.

Special dividend

Empower’s arrival will be beneficial to DEWA investors who could see their shares appreciate. Additionally, DEWA would receive a minimum dividend of Dh535 million per annum, in the first two fiscal years following the Empower offer, which may be passed on to DEWA shareholders.

The presence of UAE government backed equities with compelling dividends is an attractive proposition. DEWA remains adamant in paying a minimum dividend of Dh6.2 billion per year over the next five years, while seeking approvals to make a one-time special payment to shareholders following the receipt of Dh2.03 billion from Empower. For H2-2022, DEWA expects to pay 6.2 fils per share (Dh3.1 billion) in April next.

DEWA announced impressive H1-2022 earnings, with revenues of Dh12.08 billion, a gain of 15 per cent on Dh10.5 billion last year. This was largely achieved from the 6.3 per cent growth in electricity demand and 6.4 per cent growth on water. As a result, net profit rose 33 per cent from Dh1.4 billion to Dh3.3 billion. During the first-half, 23,192 new water connections and 28,123 power connections were made available. Overall, there were 1.12 million accounts for DEWA.

Additionally, by implementing the latest smart technologies across all its services and operations. The use of Automatic Smart Grid Restoration System (ASGR) - the first of its kind in the MENA region - works round-the-clock without any human intervention to locate faults in the power network and automatically restores the service. DEWA also aggressively utilizes sophisticated drone technology for asset assessment to serve Dubai’s expanding infrastructure.