Dubai-based Emaar Properties said it expects profit this year to remain almost unchanged compared with 2007 because of higher construction costs for its malls and hotel projects, investment bank EFG-Hermes said.
The Egyptian investment bank cut its long-term fair value target for Emaar's share price to Dh18.50 from Dh20.04, and its earnings-per-share outlook to Dh1.23 from Dh1.63 following a conference call with Emaar officials. Emaar last traded at Dh13.05.
"The company indicated that 2008 revenue and net profit would be flat," EFG-Hermes analyst Stefan Schurmann wrote in a note to investors received on Monday.
"Higher pre-operating expense in hotels, malls, and higher marketing costs will provide a drag on earnings," Schurmann said.
EFG-Hermes, which lowered its short-term recommendation to "accumulate" from "buy", forecast Emaar's profit would rise 14.7 per cent to Dh7.51 billion this year.
Foreign operations, including Saudi Arabia and India, would contribute between 30 per cent and 35 per cent of revenue this year, EFG-Hermes said, citing Emaar.
It kept its long-term 'buy' recommendation on the stock. (Reuters)