Technology giant Apple’s stock, which closed 1.61 per cent higher at $139.07 on Friday, could be worth $200 per share in the next couple of years, according to US-based Loup Ventures.
Its bullish prediction is based on the assumption that the iPhone maker will achieve a double-digit growth in revenues in 2021, coupled with an accelerated digital transformation globally that will continue to be a “tailwind for Apple's growth for the next several years”.
The venture capital firm predicted that Apple will achieve revenue growth of 19 per cent year-on-year in the holiday quarter, ended on December 30, beating an average of Wall Street analysts' estimate of 12 per cent. It expects Apple to earn record quarterly revenue of $109.5 billion, compared to the average estimate of $102.8bn.
“We expect results will continue to instill confidence … the company will grow revenue [at] around 16 per cent in financial year 2021, compared to 6 per cent in financial year 2020,” Gene Munster, managing partner at Loup Ventures, said.
“Putting it together, we believe shares of Apple will approach $200 … 44 per cent upside from current levels … over the next couple years,” he added.
The iPhone manufacturer, whose shares have jumped around 75 per cent over the last 12 months and by 7.5 per cent since the start of this year, is scheduled to announce results for the three months to December 30 on Wednesday.
“While [average] financial year 2021 revenue growth estimates of close to 15 per cent are in line with our expectation, we believe consensus estimates for financial year 2022 of 5 per cent growth are too low … we expect those estimates to inch higher throughout the fiscal 2021,” David Stokman, an analyst at Loup Ventures, said.
Coronavirus-induced lockdowns mean many people are continuing to work and study from home. This could provide a “continued tailwind for the iPad and Mac businesses” that contribute about 25 per cent of Apple's total revenue.
These two segments can grow at more than 10 per cent this year and in 2022, compared to flat growth over the past few years, Mr Munster said.
The later launch of Apple's iPhone – the 5G-enabled iPhone 12 – last year due to supply chain disruptions could also feed into earnings for the December quarter, Loup Ventures said.
It expects the proportion of revenue from the phone's launch to reach 59 per cent, compared to the usual level of about 50 per cent of sales. This would equate to about $64.9bn, above the average estimate of $59.4bn.
“We are well ahead of the Street on iPhone for December … given our belief that nearly $8bn in iPhone revenue was pushed from the September quarter,” the company said.
Last month, Japanese newspaper Nikkei reported that Apple plans to produce up to 96 million iPhones in the first half of 2021, a 30 per cent year-on-year increase, after demand for its first 5G handsets surged amid the Covid-19 pandemic.
This, along with reports that Apple is planning to produce its first electric car in 2024 and is in early-stage talks with Hyundai, has buoyed the company's shares.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
How green is the expo nursery?
Some 400,000 shrubs and 13,000 trees in the on-site nursery
An additional 450,000 shrubs and 4,000 trees to be delivered in the months leading up to the expo
Ghaf, date palm, acacia arabica, acacia tortilis, vitex or sage, techoma and the salvadora are just some heat tolerant native plants in the nursery
Approximately 340 species of shrubs and trees selected for diverse landscape
The nursery team works exclusively with organic fertilisers and pesticides
All shrubs and trees supplied by Dubai Municipality
Most sourced from farms, nurseries across the country
Plants and trees are re-potted when they arrive at nursery to give them room to grow
Some mature trees are in open areas or planted within the expo site
Green waste is recycled as compost
Treated sewage effluent supplied by Dubai Municipality is used to meet the majority of the nursery’s irrigation needs
Construction workforce peaked at 40,000 workers
About 65,000 people have signed up to volunteer
Main themes of expo is ‘Connecting Minds, Creating the Future’ and three subthemes of opportunity, mobility and sustainability.
Expo 2020 Dubai to open in October 2020 and run for six months
Things Heard & Seen
Directed by: Shari Springer Berman, Robert Pulcini
Starring: Amanda Seyfried, James Norton
2/5
The Bio
Favourite vegetable: “I really like the taste of the beetroot, the potatoes and the eggplant we are producing.”
Holiday destination: “I like Paris very much, it’s a city very close to my heart.”
Book: “Das Kapital, by Karl Marx. I am not a communist, but there are a lot of lessons for the capitalist system, if you let it get out of control, and humanity.”
Musician: “I like very much Fairuz, the Lebanese singer, and the other is Umm Kulthum. Fairuz is for listening to in the morning, Umm Kulthum for the night.”
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