Operational and financial challenges at Damac Properties, one of the UAE’s biggest listed real estate developers, are expected to continue this year after the company reported a 25 per cent drop in full-year net profit for 2017, a report from EFG Hermes bank said.
"We think the company will face operational challenges and, potentially, see pressure on its cash flows over the coming 12 to 24 months; this might, in turn, place pressure on the company's future dividends starting 2018, and on sustaining its historical attractive dividend yields," the report said.
The developer’s net profit dropped to Dh2.76 billion in 2017 from Dh3.69bn in 2016, Damac said in a filing last week to the Dubai Financial Market, where its shares are traded. It attributed the drop to a higher cost of sales coupled with rising expenses and depreciation charges.
Revenues for the 12-month period to December 31 rose to Dh7.45bn from Dh7.16bn reported in 2016.
Damac’s stock is expected to underperform in 2018 for three main reasons, EFG Hermes’ report said – due to the company “losing market share in an already soft market”, being liable for increased accounts payable despite a slowdown in sales, and because of a Dh2.2bn repayment obligation over the coming 24 months.
Damac declined to comment when contacted by The National.
EFG Hermes forecasts contracted sales for 2018/19 will come in at around Dh6.6bn, a 12 per cent drop against 2017 levels, EFG Hermes said. “We believe the company is in need of new land purchases, although its residual land bank will be sufficient for the coming five years (in our numbers), to broaden its product offering, allowing it to compete in a relatively soft market.”
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Read more:
Damac Properties says full year net profit dropped 25 per cent
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Accounts receivable have been on a consistent uptrend since the first quarter of 2016 despite slower sales activity in the same period, EFG Hermes said, indicating that the company has more extended payment terms versus historical averages.
"Damac has, historically, collected around 40 to 50 per cent [of the cost of sold units] within the first 24 months, which we think is no longer the case," the bank said, adding that it has "concerns" over the company potentially offering further relaxed terms.
Dubai developers are offering increasingly attractive payment plans to off-plan buyers, prompting warnings of a property bubble in the months ahead.
Off-plan projects with attractive sales prices and payment plans have “transformed the residential market in 2017” said consultancy JLL’s fourth quarter 2017 market update. “Although attractive to investors, it could result in a future ‘real estate bubble’.”
However, Damac's management indicated in its fourth quarter earnings call to analysts and shareholders that it would prioritise payment plans over increasing sales volumes, EFG Hermes said in its report.
The developer is also expected to raise debt in the coming 12 months to refinance Dh1.1bn in 2018 and Dh1.6bn in 2019 of debt obligations – a total of Dh2bn due to be repaid over the next two years.
"With the current inflationary interest rate environment, and what we think is a stable/cautious operating market environment, we highlight the challenge of securing cheap financing," the report said.
Liquidity could be a challenge for Damac in 2018 given the repayment schedule, despite plans to deliver 5,500 units between June 2017 and the end of 2018, it added.
India squad
Virat Kohli (captain), Rohit Sharma, Mayank Agarwal, K.L. Rahul, Shreyas Iyer, Manish Pandey, Rishabh Pant, Shivam Dube, Kedar Jadhav, Ravindra Jadeja, Yuzvendra Chahal, Kuldeep Yadav, Deepak Chahar, Mohammed Shami, Shardul Thakur.
RACE CARD
5pm: Handicap (PA) Dh70,000 1,400m
5.30pm: Handicap (TB) Dh70,000 1,000m
6pm: Maiden (PA) Dh70,000 2,000m
6.30pm: Handicap (PA) Dh70,000 2,000m
7pm: Maiden (PA) Dh70,000 1,600m
7.30pm: Al Ain Mile Group 3 (PA) Dh350,000 1,600m
8pm: Handicap (PA) Dh70,000 1,600m
Amith's selections:
5pm: AF Sail
5.30pm: Dahawi
6pm: Taajer
6.30pm: Pharitz Oubai
7pm: Winked
7.30pm: Shahm
8pm: Raniah
The Sand Castle
Director: Matty Brown
Stars: Nadine Labaki, Ziad Bakri, Zain Al Rafeea, Riman Al Rafeea
Rating: 2.5/5
SERIES SCHEDULE
First Test, Galle International Stadium
July 26-30
Second Test, Sinhalese Sports Club Ground
August 3-7
Third Test, Pallekele International Stadium
August 12-16
First ODI, Rangiri Dambulla Stadium
August 20
Second ODI, Pallekele International Stadium
August 24
Third ODI, Pallekele International Stadium
August 27
Fourth ODI, R Premadasa Stadium
August 31
Fifth ODI, R Premadasa Stadium
September 3
T20, R Premadasa Stadium
September 6
COMPANY%20PROFILE%20
%3Cp%3E%3Cstrong%3ECompany%20name%3A%20%3C%2Fstrong%3EAlmouneer%3Cbr%3E%3Cstrong%3EStarted%3A%3C%2Fstrong%3E%202017%3Cbr%3E%3Cstrong%3EFounders%3A%3C%2Fstrong%3E%20Dr%20Noha%20Khater%20and%20Rania%20Kadry%3Cbr%3E%3Cstrong%3EBased%3A%20%3C%2Fstrong%3EEgypt%3Cbr%3E%3Cstrong%3ENumber%20of%20staff%3A%20%3C%2Fstrong%3E120%3Cbr%3E%3Cstrong%3EInvestment%3A%20%3C%2Fstrong%3EBootstrapped%2C%20with%20support%20from%20Insead%20and%20Egyptian%20government%2C%20seed%20round%20of%20%3Cbr%3E%243.6%20million%20led%20by%20Global%20Ventures%3Cbr%3E%3C%2Fp%3E%0A
Martin Sabbagh profile
Job: CEO JCDecaux Middle East
In the role: Since January 2015
Lives: In the UAE
Background: M&A, investment banking
Studied: Corporate finance
COMPANY PROFILE
Name: Almnssa
Started: August 2020
Founder: Areej Selmi
Based: Gaza
Sectors: Internet, e-commerce
Investments: Grants/private funding
The specs
Engine: 4.0-litre flat-six
Torque: 450Nm at 6,100rpm
Transmission: 7-speed PDK auto or 6-speed manual
Fuel economy, combined: 13.8L/100km
On sale: Available to order now
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
GOLF’S RAHMBO
- 5 wins in 22 months as pro
- Three wins in past 10 starts
- 45 pro starts worldwide: 5 wins, 17 top 5s
- Ranked 551th in world on debut, now No 4 (was No 2 earlier this year)
- 5th player in last 30 years to win 3 European Tour and 2 PGA Tour titles before age 24 (Woods, Garcia, McIlroy, Spieth)
PRIMERA LIGA FIXTURES
All times UAE ( 4 GMT)
Saturday
Atletico Madrid v Sevilla (3pm)
Alaves v Real Madrid (6.15pm)
Malaga v Athletic Bilbao (8.30pm)
Girona v Barcelona (10.45pm)
Sunday
Espanyol v Deportivo la Coruna (2pm)
Getafe v Villarreal (6.15pm)
Eibar v Celta Vigo (8.30pm)
Las Palmas v Leganes (8.30pm)
Real Sociedad v Valencia (10.45pm)
Monday
Real Betis v Levante (11.pm)
FIXTURES
All kick-off times 10.45pm UAE ( 4 GMT)
Tuesday
Mairobr v Liverpool
Spartak Moscow v Sevilla
Feyenoord v Shakhtar Donetsk
Manchester City v Napoli
Monaco v Besiktas
RB Leipzig v Porto
Apoel Nicosia v Borussia Dortmund
Real Madrid v Tottenham Hotspur
Wednesday
Benfica v Manchester United
CSKA Moscow v Basel
Bayern Munich v Celtic
Anderlecht v Paris Saint-Germain
Qarabag v Atletico Madrid
Chelsea v Roma
Barcelona v Olympiakos
Juventus v Sporting Lisbon
German intelligence warnings
- 2002: "Hezbollah supporters feared becoming a target of security services because of the effects of [9/11] ... discussions on Hezbollah policy moved from mosques into smaller circles in private homes." Supporters in Germany: 800
- 2013: "Financial and logistical support from Germany for Hezbollah in Lebanon supports the armed struggle against Israel ... Hezbollah supporters in Germany hold back from actions that would gain publicity." Supporters in Germany: 950
- 2023: "It must be reckoned with that Hezbollah will continue to plan terrorist actions outside the Middle East against Israel or Israeli interests." Supporters in Germany: 1,250
Source: Federal Office for the Protection of the Constitution
Dubai World Cup factbox
Most wins by a trainer: Godolphin’s Saeed bin Suroor(9)
Most wins by a jockey: Jerry Bailey(4)
Most wins by an owner: Godolphin(9)
Most wins by a horse: Godolphin’s Thunder Snow(2)
How to avoid crypto fraud
- Use unique usernames and passwords while enabling multi-factor authentication.
- Use an offline private key, a physical device that requires manual activation, whenever you access your wallet.
- Avoid suspicious social media ads promoting fraudulent schemes.
- Only invest in crypto projects that you fully understand.
- Critically assess whether a project’s promises or returns seem too good to be true.
- Only use reputable platforms that have a track record of strong regulatory compliance.
- Store funds in hardware wallets as opposed to online exchanges.
Venom
Director: Ruben Fleischer
Cast: Tom Hardy, Michelle Williams, Riz Ahmed
Rating: 1.5/5
Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
How to protect yourself when air quality drops
Install an air filter in your home.
Close your windows and turn on the AC.
Shower or bath after being outside.
Wear a face mask.
Stay indoors when conditions are particularly poor.
If driving, turn your engine off when stationary.
MATCH INFO
Uefa Champions League final:
Who: Real Madrid v Liverpool
Where: NSC Olimpiyskiy Stadium, Kiev, Ukraine
When: Saturday, May 26, 10.45pm (UAE)
TV: Match on BeIN Sports