Aramex has confirmed to DFM that Alpha Oryx Ltd., a company related to Abu Dhabi's ADQ, acquired 22.25 per cent of Aramex’s issued share capital. Aramex shares were purchased through a combination of market transactions and off-market deals.
It reaffirms Aramex’s status as a premium logistics company of UAE. Moreover, an acquisition by ADQ indicates that the company is strategically important and this bodes well for its future. Abu Dhabi is likely to treat Aramex as a key partner to solve its logistics-related issues.
COVID-19 has shown us the importance of last-mile connectivity and the crucial role Aramex plays in it. While the entire hospitality as well as retail sectors were battered, one that stood out was ecommerce. In fact, Online sales ameliorated some of the pain of retail sector.
Revenues ride ecommerce wave
Aramex with a market capitalization nearing Dh6 billion provided support to e-commerce and acted as a vital cog of the UAE's supply chain. Bucking the trend, Aramex revenues grew by 4.2 per cent to Dh1.33 billion in the second quarter.
This is a truly diversified company with MENA region accounting for 56.90 of the revenue, rest of asia 27 per cent, Europe 13 per cent plus, and North America accounting for 2.50 per cent.
Aramex has also consistently grown its revenues. From Dh3 billion in 2012, it grew to Dh5.2 billion in the last year. For the latest quarter, international express services contributed 43.70 per cent of revenue and domestic express by 25.20 per cent. The company with a dividend yield of 4.13 percent is certainly a good bet for long-term investors looking to ride the UAE e-commerce trends.
Reflecting weak global sentiments, DFM declined by 2.16 per cent on Monday (September 21) while ADX ended the day in the red by 1.19 per cent. US President Trump, who is considered market-friendly, is trailing former Vice-President Joe Biden, while Europe is seeing a resurgence in coronavirus cases. All of this is hampering risk sentiments... and UAE markets are likely to have tough week.
- Vijay Valecha is Chief Investment Officer at Century Financial.
