Stock Union Properties Dubai
More trouble for Union Properties, with DFM stopping trades on the stock. Image Credit: Ahmed Ramzan/Gulf News

Dubai: Trading in Union Properties’ shares on DFM has been suspended for a second time in the last few days – the latest one is because the developer failed to announce its third-quarter results on schedule.

The stock has been volatile all through this period, twice coming close to setting off the circuit-breaker by dropping to 10 per cent. A circuit-breaker relates to a stock being pulled out from trading for a certain time if it shoots up or down beyond a certain percentage. On DFM, the lowest a share can drop is 10 per cent before it gets yanked out – Union Properties fell to below 9 per cent yesterday as well as last week.)

In 2020, during the worst of the pandemic, DFM introduced a 5 per cent downward limit for stocks. But with the return of normality, it has reverted to the 10 per cent limit down cap," said Vijay Valecha, Chief Investment Officer at Century Financial, on the circuit-breaker triggers.

These have been exceptionally difficult times for the company – and not just limited to the stock seesaw. Recent days have seen the developer confirm that the UP chairman is under detention pending investigations by the federal authorities on certain asset sales from last year.

27.8fils

The Union Properties' share price at the time of its suspension

A risky bet?

Union Properties’ delay on the third quarter results come as other developers announce record numbers, or a steep drop in their losses compared to a year ago.

“Union Properties is unlikely to see any fresh buying from investors - there are too many corporate governance issues,” said Valecha. “In this case, prominent company insiders have been accused of siphoning of assets by selling assets below value through related-party transactions. And the company is under federal investigation.

“The probe into the company affairs by itself is a positive sign and might help in the recovery of some of the company's assets. It certainly sends a message to the world that UAE is serious about investor rights protection.”

How have other developers fared?

Emaar Properties: In the first nine months, Emaar revenues came in just under the Dh19.33 billion mark, an increase of 57 per cent on 2020. In the UAE, property sales were at Dh20.99 billion – and that’s five times over the comparable 2020 booked sales. Emaar’s net profit for the July to September period alone was Dh1.01 billion.

Damac Properties: The developer cut down sharply from the Dh931 million in net losses sustained for the first nine months of 2020, reporting Dh481 million in losses for the period this year. What the developer can look forward to is the improvement in gross margins from 22.7 per cent to 29.6 per cent for the current period. Revenues were Dh2.39 billion.