Emaar stocks rise by 11%

The price of Emaar Properties’ shares has surged more than 11 per cent over the past two trading sessions, jumping from Dh11.35 on Tuesday to Dh12.65 at the end of trading on Thursday.

The sudden improvement has been attributed to an HSBC report that claims Emaar’s long-term fair value is Dh23.

“People are really relating to such a huge number,” said Alok Nawani, Mac Sharaf Securities equity investment analyst. “But it wasn’t so long ago that Emaar’s CEO was warning the company would have flat growth in 2008, so the sudden rally seems like an over-reaction to this news.”

Research reports have come in for criticism recently, with some observers questioning not only the motives, but also the methodology of many of the companies publishing fair values for UAE-listed stocks. These divergent approaches have led to wildly varying estimates of a company’s worth.

For example, on Wednesday, Credit Suisse offered a far more conservative outlook for Emaar, actually reducing its fair value to Dh15.33.

The contradictory nature of these reports has done little to dampen investors’ enthusiasm for Emaar, however. “The sentiment is changing,” said Amro Diab, EFG-Hermes head of institutional sales. “Emaar has always traded at a discount and so is attractively priced, although that’s not to say it won’t correct again next week.”

Analysis reveals Emaar will rise to Dh13.40 if it can close above Dh12.70. To do this, its daily volume will have to top 70 million shares. Emaar’s share price has struggled over the past 12 months, falling 4.2 per cent while the DFM index has rose by 40 per cent over the same period.