Second-quarter profit at Dubai developer Emaar up 29% to Dh868m
Emaar Properties yesterday reported a 29 per cent year-on-year jump in second-quarter profit to Dh868 million, but slightly undershot analysts’ estimates as property development revenue fell.
The estimates ranged between Dh880m and Dh960m, with Emaar falling short of the median analyst estimate by 7.1 per cent.
Analysts had previously forecast total profit for the Dubai developer this year of Dh2.95 billion and revenue of Dh 10.7bn.
Despite this, Emaar’s second quarter gross profit margin of 61.5 per cent was significantly larger than Aldar’s 17.2 per cent margin. Emaar sells mainly to the private sector at high margins, while Aldar sells large volumes to the Abu Dhabi Government, analysts said.
“This was a good set of results. Emaar showed its traditional strengths – it’s good at retail, good at hospitality, and its core profitability was strong,” said Loic Pelichet, who covers Emaar for NBK Capital.
Overall second-quarter revenue fell by 10 per cent to Dh2.8bn from Dh3.1bn in the same period last year.
Revenue from property development fell 23 per cent to Dh1.5bn. International investors accounted for about 20 per cent of property sales, the company said.
Falling revenue was partially offset by strong performances from Emaar’s malls, hospitality and retail businesses, which gained 12 per cent year-on-year to Dh1.3bn.
Stable and growing demand for property with robust price growth and booming hospitality and retail sectors in Dubai all contributed to an optimistic outlook for Emaar, analysts said.
“The Dubai story hasn’t changed,” said Mr Pelichet.
The rate of increase of property prices in Dubai has slowed in recent months, according to data from Cluttons. The property company JLL also reported slowing rental rates in Dubai in the second quarter of the year.
Both companies have said rental rates continue to grow, however.
Emaar’s shares yesterday rose 0.3 per cent to Dh3.05 each. The company’s share price has gained 6.6 per cent since July 24.
“Recent share price rises are the product both of the imminence of the results, and the expectation that the Dubai Malls IPO will happen sooner rather than later,” Mr Pelichet said.
The flotation of a 25 per cent stake in Emaar’s malls and retail arm on the Dubai Financial Market has not yet been given a date.
“Emaar provides unique exposure to Dubai’s real estate sector as well as its booming tourist and hospitality industries,” wrote analysts from the Securities and Investment Company, an investment bank based in a Bahrain.
“We believe that the company is in an optimal position to gain from Dubai’s real estate revival, and its rising status as a global tourist hub,” the bank said in a research note.
Emaar’s earnings are estimated to grow at a compound annual growth rate of 34 per cent to 2017, analysts at Sico estimated.
“In the last six months, Emaar has contributed significantly to building Dubai’s property infrastructure through the launch of several new projects,” said Mohamed Alabbar, Emaar’s chairman.
In February, Standard & Poor’s raised Emaar’s credit rating to ‘BBB-’, the ratings company’s lowest investment grade.
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Published: August 4, 2014 04:00 AM