A combination of strong growth and dividend yield makes ADX-listed Borouge a compelling investment story

Borouge plc logo

While the global industry has struggled with challenging market conditions over the last two years, Borouge has continued to create substantial value for investors. The company has achieved a total shareholder return of +16% since its IPO in June 2022 and +4% in FY 2024, driven by steady share performance and delivery on its dividend commitments.

This represents significant outperformance over key benchmarks, with the global MSCI ACWI index producing a total return of -6.32% since June 2022 and -8.7% last year, and the ADSMI index of Abu Dhabi stocks delivering total returns of -1.5% and -1% respectively over those timeframes. 

Importantly for future share price appreciation, Borouge is delivering robust earnings growth. The company’s net profit has increased consecutively, in combination with industry-leading profitability, with the EBITDA margin standing at 40% in the third quarter.

This success is being driven by record production and sales volumes, amid strong demand for high quality materials from sectors as diverse as infrastructure, healthcare, mobility and agriculture across growth markets in Asia, Africa and the Middle East. The company’s products already command a high premium in international markets, and pricing will benefit further as economic conditions improve.

However, for investors who like certainty, there are two core reasons why Borouge shares represent an attractive opportunity – upcoming capacity expansion and a strong dividend. 

Firstly, Borouge is on track to transform its production site in Al Ruwais industrial City the world’s largest integrated single-site polyolefin complex through the Borouge 4 project. Once fully operational, the project is expected to add between $1.5 to $1.9 billion to annual revenue. In addition, a production increase through its second ethylene unit (EU2) will further contribute to annual revenue.

Secondly, due to its strong cash generation, Borouge is also expected to continue to pay out a dividend of $1.3 billion annually, equivalent to 15.88 fils per share and representing an attractive current yield of 6.4%. The stock’s yield makes it among the most attractive on the Abu Dhabi bourse.

Having shown remarkable resilience in the face of challenging market conditions, Borouge is now entering a phase of accelerated growth and innovation as a leader in the global petrochemicals industry. The company’s robust production and sales volumes in 2024 are set to gain further momentum in the coming year, driven by a strategic commitment to enhancing operational efficiencies and expanding its presence in high-value market segments.