EFG-Hermes Sees Stronger
H2 Performance by Emaar

DUBAI — EFG-Hermes has upgraded Emaar Properties to a ‘neutral’ from ‘reduce’ rating in the short-term, citing its better-than-expected second quarter results and its expected stronger performance in the second half.

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Published: Fri 21 Aug 2009, 11:11 PM

Last updated: Sun 5 Apr 2015, 9:33 PM

EFG-Hermes said that had it not been for the one-off writedown of Dh1.697 billion for its US subsidiary, JL Homes, Emaar, the Middle East’s biggest property developer, would have reported a solid net profit of Dh413 million, nearly three times higher than its own estimate of Dh145 million.

Emaar posted a second quarter loss of Dh1.284 billion.

While revenue declined by 65 per cent from a yearago, this was 25 per cent higher from the first quarter at Dh1.940 billion, which again beat EFG-Hermes’ estimate of Dh1.147 billion. Emaar’s operating profit of Dh458 million was also well ahead of EFG-Hermes’ estimate of Dh127.1 million.

Emaar also recorded a strong growth in rental income in the second quarter, up by a hefty 357 per cent from a yearago at Dh416 million, reflecting a more substantial contribution from its UAE-based rental properties, particularly the Dubai Mall. Analysts expect new revenue to buoy Emaar’s coffers when it opens Burj Dubai, the world’s tallest skyscraper, before the end of the year.

EFG-Hermes also cited Emaar’s strong balance sheet. It said the company’s total debt in the second quarter decreased by Dh1.6 billion to Dh8.3 billion compared to the previous quarter after the writedown related to its US operations. The long-term ‘neutral’ rating of Emaar was maintained however due to the lack of visibility regarding its pending merger with the three property companies controlled by Dubai Holding.

“We are not yet buyers of Emaar as the visibility regarding its potential merger with the three Dubai Holding entities remains weak. Until greater disclosure on

the merger is made available, we believe an overhang will persist on the stock,” said EFG-Hermes.

Heavily-traded Emaar shares which are listed at the Dubai Financial Market, ended 2.7 per cent higher at Dh3.02 on Thursday.


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