Singapore link helps Depa defy trend

Share price up more than 45 per cent from beginning of the year

The potential acquisition of a Singapore furniture company could be yet another building block for Depa, the Dubai interior design company that has been one of the star performers in the first half of the year. Depa's share price is up more than 45 per cent from the beginning of the year, a period in which most listed stocks in the Emirates have been moving in the other direction.

Depa has been propelled in part by continued interest from foreign investors as well as the belief that the stock will benefit from the pending merger of NASDAQ Dubai and the Dubai Financial Market. Depa already owns 25 per cent of Design Studios, a well-regarded Singapore-based company, and this week said it hoped to buy the remaining shares for US$105 million. The deal is designed to strengthen Depa's position to bid for projects in Asian markets.

The founding shareholders of Design Studios, who control 50 per cent of the outstanding shares, need to approve the deal. A formal offer is to be proposed within 21 days, with a decision required 28 days later. Chet Riley, an analyst with Nomura Securities, said he expected the deal to go through by the third quarter. Mr Riley maintains a "buy" rating on the stock with a target price of $1.05. The offer for the Singapore company is part of a larger focus by Depa on markets outside the UAE, notably those in Asia, Egypt and Saudi Arabia.

As of the first quarter, the company said 33 per cent of its backlog was in Dubai and 23 per cent in the rest of the UAE. The company reports its backlog twice a year and Mr Riley expects the company's dependence on Dubai to lessen when it next reports in the third quarter. In its last announcement in March Depa said its backlog was Dh700m. [e-mail]