Sorouh Real Estate is back in investors' good books as it begins handing over units it built in the boom days of property development.
The capital's second-largest publicly traded developer has also just signed a contract with the Abu Dhabi Urban Planning Council valued at Dh13.5 billion.
The agreement includes a Dh2.89bn deal with Sorouh to build 7,500 houses for Emiratis.
"At this point any governmental contract award for Abu Dhabi real estate names is positive," said HSBC in a note to clients.
The company's shares have shot up more than 50 per cent since March 2, mainly driven by local funds and high-net-worth individual investors, the HSBC note added.
Yesterday, the shares ended 1.3 per cent higher at Dh1.52, and analysts say the stock is still undervalued.
"It was doing pretty well before the news [of the government contract came out]," said Majed Azzam, a property analyst who covers Sorouh at Alembic HC Securities.
He said this should be a "turnaround" year for Sorouh as offices and apartments in Sky Tower in the Shams Abu Dhabi project and on Reem Island began to be handed over.
"They have been building and haven't been delivering anything, so potentially we're going to see strong growth in the top line and that should impact the share price," Mr Azzam said.
He has an "overweight" recommendation on the stock with a target price of Dh1.60, which he says still represents a "cautious" outlook.
"The way I see it, every quarter we're going to see improvement on the balance sheet and a lot of risky assets converted to cash if handovers go as planned," he said.
Sorouh collects the final 40 per cent of the purchase price of homes on delivery and cannot report profits on sales until the units pass on to owners.
The number of transactions has remained low since the onset of the global financial crisis, which led prices to fall by about half in some parts of the UAE from their peaks.
