By: Mahmoud Gamal
Dubai – Mubasher: Emaar Properties’ stock recorded strong gains in July 2017 amid expectations of a growth in profits for the first half of 2017.
During the first 10 sessions of July, Emaar’s stock recorded a rise in its market capitalisation by 2.02% reaching AED 1.36 billion, while the stock’s overall the market cap amounted to AED 57.063 billion, statistics by Mubasher showed.
The real estate company’s stock achieved liquidity of AED 293.7 million, representing 13.2% of Dubai Financial Market’s (DFM) total liquidity of AED 2.2 billion during the 10-session time frame.
Since the start of 2017, Emaar’s earnings increased notably exceeding AED 6 billion. The company previously logged AED 51.04 billion in profits for the full-year 2016.
Positive projections for profits
Active trading on Emaar has coincided with profit forecasts averaging AED 2.8 billion in net profits, whereas profit guidance for Damac Properties is expected at AED 1.7 billion.
Projections for Emaar Properties’ profits for the second quarter of 2017 are also positive, as analysts expect a 9% rise to around AED 1.4 billion compared to figures from the corresponding period of 2016.
We expect Emaar to achieve a profit growth of 11% year-on-year to reach AED 1.415 billion in Q2-17 on the back of higher revenues from its hospitality sector, according to a report by SICO research.
Meanwhile, Tariq Qaqish, deputy head of asset management at Mena Corp expects the Dubai-listed property developer to achieve an 8% rise in profits to AED 1.3 billion in Q2-17, compared to Q2-16.
Emaar’s ability to maintain its sales growth rate, which exceeded AED 6 billion in Q1-17, positively supports its financial results and will enable it to achieve strong profits despite the economic fluctuations in the region, which affect the real estate sector, Qaqish told Mubasher.
Emaar’s plan to offer part of its portfolio in an initial public offering (IPO) is a positive step that reinforces the parent company’s position and which will be reflected automatically on the stock’s price, Qaqish added.
Mohamed Alabbar, chairman of Emaar Properties, told Al Arabiya news channel in an interview, that he expects Emaar’s real estate business to be offered in an IPO in November 2017.
The Emirati developer announced that it was planning to offer no less than 30% of the real estate development business, noting that the final stake to be offered will be confirmed ahead of the IPO.
In a research note, SICO raised its price target (PT) for Emaar Properties’ stock to AED 9.5 and gave a ‘buy’ recommendation.
The research firm projected a profit growth ranging between 12% and 18% in 2018 on the back of expansion in hospitality projects.
Emaar’s investments in Egypt and VAT impact
Despite the positive outlook for Emaar, Qaqish called on investors to keep an eye on the company’s investments abroad, especially in Egypt where the flotation of the currency has had a negative impact.
Investors should follow up on Emaar’s results affected by value-added tax (VAT) in GCC starting 2018, which will determine how the tourism sector will progress, Qaqish told Mubasher.
Scheduled for implementation in the UAE on 1 January 2018, the VAT is forecast to be at 5%.
Translated by: Mai Ezz El Din
