Dubai: Union Properties suffered a sharp decline in revenues to total Dh1.64 billion last year from 2011’s tally of Dh4.92 billion, according to filings with Securities and Commodities Authority. But there has been a positive on the net profits side to a marginal Dh175.78 million from a quite substantial loss of Dh1.56 billion in 2011.
“Even then, net profit gains are most likely from one-off valuation gains on its properties,” said P. Krishnamurthy, CEO of Dubai International Securities. “What’s worrying is Union Properties recorded a net operating loss in 2012 of Dh31.89 million. It has also been among the worst-performing real estate stocks and earlier in the day [February 19] was at 44 fils.”
Union Properties, the developer of Green Community and MotorCity, also saw total assets pared down to Dh9.09 billion from Dh9.17 billion. It has a paid-up capital of Dh3.36 billion.
“The counter has not been active in recent weeks despite the increased interest among investors for local real estate scrips in line with Emaar’s latest numbers and the merger play between Aldar and Sorouh,” said Krishnamurthy.
Market analysts are unable to estimate fair value of the stock, given the fact that “gains or losses on valuation of properties” have historically made Union Properties’ earnings volatile and also due to limited visibility on them.
Apart from the headline financials, a break out of Union Properties’ numbers — which would have provided details of income from property sales and rentals — was not available. A general improvement in Dubai’s rental values should rub off on the company’s near-term numbers. But a broader improvement will require a going back to basics, i.e, get involved in projects all over again.
Details of its land bank were also not posted in the latest filings. In the recent past there was speculation that a turnaround strategy was being formulated. The wider market, for one, is keenly awaiting any signal the company can provide on this.
With regard to company’s debt burden, market views the debt repayments during 2012 positively. However, it remains to be seen as to where will company’s short-term debt stand against the cash balance, which was not looking favourable until Q3-2012.