ADNOC Logistics & Services (ADNOCLS)

Equity Research 11 August 2026 | 10:41AM GST

ADNOC Logistics & Services (ADNOCLS.AD): Shipping strength drives 2Q26 beat and raise on high TCE rates despite weaker IL; Buy

ADNOC L&S reported 2Q26 results on August 11th pre-market open. Faisal AlAzmeh, CFA | A substantial beat vs estimates across the board and a meaningful upgrade to Goldman Sachs International

guidance driven by Shipping performance, where Tankers more than offset Roman Reshetnev | weaker IL from an ECL provision and the roll-off of the completed G-Island Goldman Sachs International project. Revenues came in +59%/+69% ahead of GSe/company-compiled Fadi Bataineh consensus, driven by growth in TCE rates and services supporting ADNOC, partly | offset by lower ILSP volumes and JUB pricing/utilization pressure. EBITDA beat Goldman Sachs International GSe/cons by +65%/+61% on the top-line beat, with group EBITDA margin of Swarnilee Patra | 43% vs. GSe/cons at 41%/45%. Net profit beat GSe/cons by +82%/+85% at Goldman Sachs India SPL US$951mn, supported by strong operating leverage from the segment mix, a gain on sale of a VLCC, and higher associate/JV profit contribution. We look forward to management’s conference call scheduled for Tuesday, August 11th at 15:00 UAE time.

We expect the upcoming investor focus points to include: (i) the trajectory of TCE rates into 2H26, given the print being a result of strong charter markets; (ii) the drivers and one-off nature of the IL ECL provision within Offshore Contracting and the Bu Haseer project cost overruns/provisioning within Offshore Projects; (iii) the raised FY26 guidance across Revenue (mid-20% growth vs low single-digit prev.), EBITDA (mid-60% growth vs high-20% prev.), and Net Profit (high-110% growth vs high-60% prev.), and specifically the assumptions behind the growth in Shipping EBITDA guidance to low-190% growth (vs mid-to-high-50% prev.); (iv) the delivery cadence of the 2H26 fleet which include one VLAC, six VLCCs, three VLGCs in 3Q; one VLEC, one VLAC, two VLGCs in 4Q and beyond that the 4 next-gen LNGCs for 2029 delivery, with an update on the associated earnings visibility from ~US$25bn of fwd-contracted revenue; and (v) capital allocation, with the new US$2.0bn parent RCF (upsizable by US$600mn), 2Q net debt/EBITDA of 0.06x, and the 4.23fils/sh 2Q26 interim dividend (which implies an annualized yield of ~2.8%, consistent with div policy of +5% YoY growth and GSe 2026E ~2.8% DY).

We expect the market to react positively to the meaningful, though generally anticipated, headline beat and the material FY26 guidance raise, with a key debate being the concentration of the upside in tankers, with the earnings beat being Shipping-led while IL EBITDA fell -44% YoY at a 24% margin (vs 36% in 2Q25). In our view, the Shipping strength is supportive of near-term earnings where investors were

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Goldman Sachs ADNOC Logistics & Services (ADNOCLS.AD)

concerned about the outlook prior to the conflict, as softer activity was expected as the company moved toward the more lucrative gas carrier expansion and contracting/projects activity in the medium-term. While an immediate normalization in TCE rates could remove the primary source of the 2Q beat, we see the current environment leaning closer to complementary upside to an already high-quality medium-term earnings profile driven by a ~US$25bn contracted book and the company’s core position in supporting ADNOC Group’s growth ambitions, which is the more structural driver of our investment thesis. We see the raised guidance and balance sheet as supportive, though we would expect investors to look to seek reassurance on the run-rate normalization of the ECL…