Emaar Properties recorded its highest quarterly profit in the fourth quarter of 2007 at Dh1.736 billion, while revenues for the same quarter reached Dh5.029bn.
Mohamed Ali Alabbar, Chairman, Emaar Properties (pictured above), said: “In a tough year for the global property market, Emaar recorded impressive financials – testament to the strong fundamentals that drive the company.”
The company reported annual net profit of Dh6.575bn in 2007, three per cent higher than the net profit of Dh6.371bn recorded in 2006, according to its consolidated income statement issued yesterday. Annual revenue increased by 25 per cent to Dh17.566bn compared to Dh14bn in 2006.
Analysts gave a positive outlook for Emaar Properties’ performance. “The results for 2007 came in line with expectations. The increase of three per cent is the same level achieved during the past few years,” said Ahmed Abdel Rahman, financial analyst at Amana Capital.
“Earnings of Emaar Properties during the fourth quarter were the highest in the company’s history due to many positive factors.
Emaar’s international associates started operating during 2007. This increased the profits,” he added.
Emaar is currently operating in 16 countries around the world.
International operations started contributing positively to the group’s profitability with joint ventures in India and Morocco earning profits during 2007.
Wadhah Altaha, head of strategies and business development at Emaar Financial Services, said Emaar Properties could successfully absorb shocks from the sub-prime crisis and its loses in the United States property market.
“To achieve three per cent increase in its revenues is a great work by Emaar. The company is in a strong position in the international property market. I expect international associates of Emaar will lead to significant increase in the company’s profits this year and the coming years. The results of the fourth quarter of 2007 were impressive due to earnings achieved by international operations,” Altaha added.
Marking its stature as a global conglomerate, Emaar was ranked in the Financial Times Global 500 list, while its flagship development, Burj Dubai, scaled 158 storeys to become the tallest building and free-standing structure in the world.
In India, Emaar MGF has filed the Draft Red Herring Prospectus (DRHP) for an IPO with the Securities and Exchange Board of India (SEBI) and approval is expected shortly. In Egypt, Emaar acquired full ownership of its subsidiary in the country and announced two new mixed-use projects.
Emaar Pakistan commenced the sale of homes at Crescent Bay in Karachi, complementing sales for Canyon Views homes in Islamabad. Meanwhile, Emaar Morocco, Emaar International Jordan and Emaar Turkey launched home sales, and Emaar Syria made gains with the launch of commercial space within its Eighth Gate development. In Saudi Arabia, Emaar, The Economic City unveiled the first residential component, Bay La Sun Village.
Emaar stock well below market value
Despite Emaar Properties’ strong showing during the fourth quarter of 2007 and its three per cent jump in profits last year, the company’s stock on the Dubai Financial Market suffered a major setback yesterday.
Emaar’s stock price dropped from Dh15.40 to Dh14.6, representing a loss of 4.58 per cent. In total, more than 93 million shares were sold in one day.
Wadhah Altaha, head of strategies and business development at Emaar Financial Services, said the results surpassed pessimistic forecasts. “Investors interpreted the results negatively and there was exaggeration in their reactions. The current price of Emaar stock, along with the level of profits, is encouraging.”
Ahmed Abdel Rahman, financial analyst at Amana Capital, told Emirates Business there was no reason behind the sell off.
“Emaar Properties results were predicted. There were no surprises so the drop in the stock price is totally unjustified. It was a fierce reaction to the results although there were positive indicators in the results and the news for Emaar.
“Emaar’s associates in other countries started generating earnings during the fourth quarter of 2007 and this will increase profits this year. Also the approval of the initial public offer (IPO) of Emaar MGF is expected next week,” he said.
Rahman also predicted that the market value of Emaar MGF in India would exceed the market value of the mother company. “This will inject significant profits into Emaar Properties. The current situation is positive to buy stocks.”
Saket Al Jendi, managing director of the Electronic Stock for Shares and Bonds Company, attributed the drop in Emaar’s stock price to movements by investment funds that sold out their shares.
“The same situation is repeated over the years. We see a lot of action in the market before and after the announcement of companies’ results. A lot of investors buy shares expecting that specific stocks will achieve surprises in their profits. But when the results are being announced, they sell out their shares immediately. The current price of Emaar stock is very attractive,” he added.
However, other factors contributed to push Emaar stock downward. Some investors also dropped the stock because they are waiting for a dividend announcement from the developer. “There is a challenge facing the board, they have limited alternatives. Emaar received permission from Emirates Securities and Commodities Authority (ESCA) to buy back its stock last November and this permission is valid for one year,” said Altaha.
“In my own opinion, I have doubt that Emaar’s board will announce distribution of stock dividends on shareholders because this will contradict with the permission. I believe the only logical option is distribution of cash dividends,” he added. Altaha expects the board to announce cash dividends between 10 and 20 per cent.
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