HSBC Expects 51 Per Cent Drop in Sorouh’s Net Profit

DUBAI - HSBC is forecasting a hefty 51 per cent drop in the net profit this year of Abu Dhabi-based Sorouh Real Estate and cut its target price to Dh5.55 from Dh6.60 while keeping its “overweight’ rating on the company.

HSBC revised its net profit forecast for Sorouh to Dh1.519 billion from the original forecast of Dh3.084 billion.

Revenue was cut by 35 per cent to Dh3.809 billion from Dh5.891 billion. HSBC said its revised net profit and revenue forecast were based on assumptions there would be no new land sales in the next two years amid the global property slump, and as 2008 results fell below expectations.

It said the current market price reflects a weighted average cost of capital of 35 per cent and “no new sales.” Sorouh’s earnings per shares this year was cut by 51 per cent but raised by 44 per cent in 2010

A turnaround is seen for Sorouh in 2010 with net profit forecast to rise by 44 per cent to Dh2.390 billion.


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