Dubai: A top pick of investors and fund managers before the crisis in 2008, real estate mortgage firm, Amlak Finance will re-list on Dubai Financial Market on Tuesday after a six-and-a-half year absence.
Amlak has not traded since November 2008, when its shares were suspended along with rival Tamweel, as credit markets dried up and Dubai property prices began a slump which would see them fall more than 50 per cent from their peak.
But as it re-lists on Tuesday, fund managers say the scrip might witness selling pressure in initial hours of trade, as they expect many investors to offload positions in early Tuesday trade.
“We might see some initial pressure depending on the price at which it opens up and from there on it would stabilise a bit,” Mohammad Shabbir, head of equity funds & portfolios at Rasmala Investment Bank, told Gulf News.
“It would be a very volatile session like an IPO on the very first day with some agrresive selling and aggressive buying, and from there on we see some expectations developing,” Shabbir added.
The company recorded a net profit attributable to its equity holders of Dh59 million in 2014 after the completion of a restructuring process in November as it disclosed its results for the first time in six years.
This compares with a net profit attributable to equity holders of Dh240 million in 2008.
“It all boils down to how the investors value this company in [the] current environment. It is not easy in [the] current business environment and margins are not the same [as in the period] before it got delisted,” Shabbir said.
Investors’ pick
Before 2008, Shabbir said, anything relating to real estate was an investor’s best pick.
“It’s an unpleasant experience for investors if their money is stuck for a while. I don’t think at the very first glance investor perception would be [that] it is a very good name to have unless someone has a very keen view on the fundamentals,” Shabbir said.
He said the first few days would be very critical for the stock.
Solid foundation
In 2014, Amlak completed the restructuring of its Dh10 billion balance sheet, which allowed it to create a solid foundation for its recovery and future growth.
Under that restructuring, Amlak took certain impairments on its real estate investment portfolio.
The company also termed out its short-term facilities into a 12-year fixed profit facility. As part of the deal, an appropriate security package was also granted to financiers.
The company has paid Dh2.8 billion to its financiers under the restructuring package.
“It’s the duty of the management to provide details to shareholders on its strategy and what they want to do and other details,” said Sebastien Henin, head of asset management at The National Investor.