Emaar estimate cut due to Egypt exposure

Emaar Properties, the largest developer in the region, had its price target cut 13 per cent by Deutsche Bank yesterday, citing uncertainties in Egypt.

Emaar Properties, the largest developer in the region, has had its price target cut 13 per cent by Deutsche Bank, which yesterday cited uncertainties in Egypt.

"Even if events remain fluid and the impact on the property sector is difficult to gauge at this stage, we believe the Egyptian real estate market is likely to remain uncertain for some time," the bank's analyst, Nabil Ahmed, wrote in a note to clients. "This is a major setback to Emaar's international diversification story given that Egypt is its largest market outside of Dubai and the most visible growth area."

Mr Ahmed said the company claimed Egypt would account for almost half of international deliveries by 2013, and a third of total units handed over.

The price estimate was lowered to Dh4.50 a share, from Dh5.20 a share, while the rating was maintained at "buy". Emaar traded 1.2 per cent higher at Dh3.20 yesterday.

"It is worth highlighting that Emaar has no outstanding land liabilities, has purchased its entire Egypt land bank through auctions or private owners, and is therefore less exposed than many of its peers to potential contract litigation," Mr Ahmed said.

Emaar Misr, a 100 per cent subsidiary of the Dubai parent company, is a key player in Egyptian property. Mr Ahmed estimates the company has 5.7 billion Egyptian pounds of unsold assets in the country and a 1,470 hectare land bank, which puts it behind local developers Talaat Moustafa Group and Palm Hills.

Emaar Properties last month reported a 62 per cent decline in fourth-quarter net income to Dh273 million, from Dh720m in the same quarter in 2009.

The company on Wednesday paid a 10 per cent dividend, totalling Dh610m, its first distribution of profit to shareholders since the onset of the global financial crisis in 2008.

Emaar has Dh4bn of debt maturing this year and before announcing the dividend it held an estimated Dh5bn in cash.