Emaar’s high earnings give market a boost

Emaar Properties is likely to be heavily traded on Sunday on news that the company soared past analysts’ earnings forecasts. But long-term investors may find that there is value for them beyond what is included in the earnings.

Judging by the value of the company’s separate units, according to a recent Deutsche Bank analysis, the stock price accounts for only the revenue generated by its portfolio of malls and hotels, as well as its minority stakes in a number of development projects in the Middle East and beyond. The company’s considerable property projects in and around Dubai and its undeveloped land in the emirate was not factored into the current price. In other words, investors pay for the income-producing assets and get a bonus – the Dubai development projects and land bank.

Emaar closed at Dh3.9 on Wednesday, up 2.8 per cent. The company reported earnings after the market close. Emaar announced that its net profit more than tripled from a year earlier to Dh760 million from Dh237m from a year ago, driven largely by revenue from its mall and hotel operations. The company emphasised the success of its projects abroad in an attempt to remind investors that it is more than just a UAE property firm.

Emaar’s latest release did not quantify all of its holdings, but the company reported last year that it owned 51,600 hectares of land, which it valued at Dh79bn. It also has several property projects in Dubai at various stages of completion.

Dubai’s property woes have been well-chronicled – and Emaar’s drive to diversify is commendable – but it is hard to imagine the company will not be able to wring some value out of its Dubai assets, especially given the generally forward momentum in the Dubai World debt restructuring talks.

Source: The National

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