Outlook for DP World to Remain Challenging in 2009, Says Citigroup

DUBAI - Citigroup said the outlook for global port operator DP World in 2009 “remains challenging” despite its strong performance last year.

By Rocel Felix

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Published: Wed 28 Jan 2009, 11:04 PM

Last updated: Thu 2 Apr 2015, 4:33 AM

Citigroup in its latest note to clients kept its ‘buy’ recommendation on DP World and its price estimate of $0.50.

Previously, Citigroup said DP World in 2008 operated against a backdrop of plunging container volumes at many of the largest global container terminals, rapidly deteriorating economic growth and an unfavourable trade outlook.

“We expect 2009 and 2010 to be tough,” said Citigroup, citing that in December, leading terminals saw volumes.

DP World chief financial officer said Monday the company managed to post strong gains in 2008, with volume growing 8 per cent from 2007 to 46.8 million TEU.

This year though, Narayan and that DP World is currently reviewing its expansion projects, trimming costs and will stop hiring this year amid the global economic recession.

“With the fast-changing conditions, we have initiated a review of all expansion projects that are currently being implemented. It is too early to give numbers, but we are conserving cash and making sure capacity actually comes on line related to the market demand.”

He said the results of the expansion review would be announced sometime in March.“While volume growth was very strong in the first half, the slowing macroeconomic environment in the second half has impacted volumes at many of our terminals, especially in the final months of the year,” said Narayan.

Meanwhile, HSBC Holdings Plc cut its price estimate on Sorouh Real Estate to Dh6.6 from Dh9.4 but maintained its “overweight” rating on the Abu Dhabi-listed stock.

HSBC said while Sorouh is in a position to hurdle the current slowdown, several of its projects are highly vulnerable to the malaise gripping the property market.

“The sheer scale of development by Sorouh could stretch management and operational capacity, introducing the risks of delays and/or even project cancellation,” said HSBC.

It kept is “overweight” recommendation on Sorouh though, saying the Abu Dhabi property market is better off than Dubai because of its stronger “underlying fundamentals.”


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