Dubai: The build up in the company’s stock price in recent weeks seems to have been justified with Emaar Properties recording an 18 per cent increase in net profit to Dh2.11 billion last year (Dh1.79 billion in 2011), though revenue growth was a marginal 2 per cent to total Dh8.24 billion (Dh8.11 billion in 2011).
The revenue growth was driven by the company’s retail and hospitality divisions, which accounted for 50 per cent to Dh4.09 billion. Last year, Emaar’s malls and retail-specific operations contributed Dh2.71 billion, 27 per cent higher than the year before. The Dubai Mall saw in more than 60 million visitors, up 11 per cent from 2011’s tally. Another 1 million square feet is to be added to the mall, though the developer has not set a timeline for it.
“The planned addition to the retail environment in Dubai is impressive and the execution and delivery of the various Emaar products in retail, residential and hospitality are industry-leading on a global basis,” said David Macadam, regional director - head of retail at the property firm Jones Lang LaSalle.
The recent activity on Emaar’s stock has, in large part, centred around investor expectations that the company might hive off its retail operations into a separate entity, according to market trackers.
Since the start of the year, the Emaar stock has put on 25 per cent, from Dh3.81 to Dh4.92. If a full-year comparison was taken, the upturn has been 100 per cent plus, from Dh2.39 to Dh4.92 yesterday.
“The stock price of Dh4 has suddenly turned from resistance to support level, which indicates strong buying interest from foreign investors as well as local institutions,” said P. Krishnamurthy, CEO of Dubai International Securities. “Participation of retail investors in large numbers has also supported the price movement. The market expects some decision to be made on the company’s retail operations which have driven the profitability; in comparison growth from property operations have been sedate.”
In January, Emaar was the heavily traded scrip by foreign investors on Dubai Financial Market, as they bought 64.56 million shares and representing nearly 14 per cent of volumes.
Meanwhile, international operations fetched Dh1.26 billion and a 15 per cent share of revenues. Property handovers were done Saudi Arabia, Egypt and Turkey, among other markets. It handed over 673 homes and more than 122,000 square feet of commercial space overseas.
In Dubai, the corresponding tally was 1,105 homes and more than 149,000 square feet of commercial office space. “Emaar capitalised on the city’s resurgence by investing in creating prime real estate assets and strengthening our shopping malls and hospitality businesses,” said Mohammad Al Abbar, chairman of the company.
Emaar had assets of Dh61.2 billion as of September 30, with the overseas land bank measuring more than 234 million square metres in its overseas operations and 11.19 million square metres of current gross construction area in the UAE.
But Emaar’s share from associated companies recorded a loss of Dh23 million against the Dh48 million they fetched in 2011. But investors in Emaar stock are now looking to the expected restructuring of Amlak, the mortgage provider in which Emaar has a sizable stake, according to Krishnamurthy.