The DFM declined 0.20 per cent and ADX closed lower by 0.11 per cent on Monday (March 8).
Among listed companies, 72 have so far announced their earnings for 2020. Their aggregate sales have declined by 8 per cent to Dh293 billion from Dh320 billion in 2019. Regarding profits, the bottom-line fell 37 per cent to Dh48 billion from Dh76 billion. With not technology companies among them, this is not surprising.
Majority of UAE companies are tied to the real economy, and they get disproportionally impacted when the economy closes down. Despite all the turbulence, 22 of the 72 UAE companies posted revenue growth while 21 had profit growth. Twelve had sales as well as profit growth.
Winners on both scores
These include are BH Mubasher Financial Services (sales up 68 per cent, profit by 1,653 per cent); International Holding Co. (460 and 467 per cent); Ras Al Khaimah National Insurance (3 and 281 per cent); National General Insurance (12 and 164 per cent); Fidelity United Insurance (67 and 157 per cent); National Marine Dredging Co. (34 and 95 per cent); National Takaful Co (38 and 40 per cent); United Foods Co. (7 and 35 per cent); RAK Properties (31 and 22 per cent); Emirates Driving Co. (15 and 20 per cent); Tabreed (15 and 16 per cent); and Dubai Financial Market itself (24 and 14 per cent).
"Maksab Holding Ltd. will increase Damac Properties ownership of the outstanding share capital of Damac International Ltd to 45%. Maksab is a wholly-owned subsidiary of Damac Real Estate Development Ltd., which, in turn, is completely owned by Damac Properties Dubai Co..
Damac International indirectly owns 75% of the Nine Elms project and is also developing a resort project in the Maldives. This is part of the company's effort to diversify its business.
On DFM, Damac Properties' share has declined by 6.9% year-to-date.
Space to grow
International Holding Co. and Tabreed benefitted from acquisitions last year. In the financial services space, the performance of BH Mubasher and Dubai Financial Market is noteworthy since it shows they could capitalise on increased liquidity in the global markets. With central banks and governments set to push more money into the economies, the financial market focussed companies will do well in 2021.
Another exceptional performer was RAK Properties. Indeed, this is a real estate company that investors should watch out for.
Companies that have higher profit growth than sales growth have good operational leverage, or in other words, they can keep their costs under control even with revenue growth. Ras Al Khaimah National Insurance, National General Insurance, Fidelity United Insurance, National Takaful Co, United Foods Co. and Emirates Driving Co. are good on this score.
- Vijay Valecha is Chief Investment Officer at Century Financial.
