Aldar Properties, the second-biggest real estate developer in the UAE, said its share price could double as it develops more of its $50 billion of projects and revenue increases. Shares of the state-controlled company already almost doubled this year to July 11 after it allowed foreigners from outside the UAE federation to own its stock. The stock has since slid 16% as a global credit crunch discouraged investors from risky assets.
"We are trading at a huge discount," chief financial officer Shafqat Malik said in an interview in Abu Dhabi on Sunday. "I have always believed that we are a teen stock." Shares of the Abu Dhabi-controlled company surged almost 6% on Sunday, its biggest one-day gain in three months, to close at 6.56 dirhams ($1.79).
Deutsche Bank this month started coverage of the two-year-old firm with a 'buy' recommendation and setting a price target of 13.50 dirhams per share.
The gap between what Aldar could be trading at - 15 or 16 dirhams per share - and its share price now "is starting to close as we see more projects being executed", Malik said. "Aldar will be a different entity next year and many projects will be executed," he said.
Debt financing
Malik also revealed Aldar plans to tap lenders for a third time this year to help finance some of its $50 billion of projects.
Despite turmoil in the global credit market, the company may borrow from banks or sell bonds, adding to the $4.63 billion of debt it has secured so far in 2007, including the world's third-biggest Islamic bond sale.
"Between now and the end of the year, there is going to be borrowing," Malik said, declining to give details.
This year through 2009 will be "crunch years" for borrowing at the two-year-old company before tailing off in 2010, Malik said, declining to give an outlook for needs at the firm.
The global credit crunch, which has seen companies either delay, cut down or cancel borrowing plans as investors recoil from risky assets, has had no direct impact on Aldar, Malik said.
"Still, it's made investors more nervous and we need to take that into account," he said, without being more specific.
In February, Aldar sold $2.53 billion of five-year bonds that comply with an Islamic ban on the payment of interest, offering investors a 5.77% return, or 65 basis points above the US dollar mid-swap rate at the time of pricing.
A $2.1 billion four-year loan, finalised in June, was priced at 90 basis points above the London Interbank Offered Rate. Arranging banks have included Morgan Stanley, Barclays Bank and Credit Suisse.
Through its holdings in Aldar and other companies, Abu Dhabi, the Middle East's third-largest oil producer, is spending billions of dollars on real estate, tourism and cultural projects to help diversify its economy away from oil.
Aldar's profit in the second quarter surged 66.6% on gains in the value of its land holdings, which include waterfront properties around the city of Abu Dhabi. Revenue from operations in the second quarter, equivalent to less than 1.2% of total income, will grow during the next quarters as the company sells homes and rents out more property, Malik said, declining to give details. Source
"We are trading at a huge discount," chief financial officer Shafqat Malik said in an interview in Abu Dhabi on Sunday. "I have always believed that we are a teen stock." Shares of the Abu Dhabi-controlled company surged almost 6% on Sunday, its biggest one-day gain in three months, to close at 6.56 dirhams ($1.79).
Deutsche Bank this month started coverage of the two-year-old firm with a 'buy' recommendation and setting a price target of 13.50 dirhams per share.
The gap between what Aldar could be trading at - 15 or 16 dirhams per share - and its share price now "is starting to close as we see more projects being executed", Malik said. "Aldar will be a different entity next year and many projects will be executed," he said.
Debt financing
Malik also revealed Aldar plans to tap lenders for a third time this year to help finance some of its $50 billion of projects.
Despite turmoil in the global credit market, the company may borrow from banks or sell bonds, adding to the $4.63 billion of debt it has secured so far in 2007, including the world's third-biggest Islamic bond sale.
"Between now and the end of the year, there is going to be borrowing," Malik said, declining to give details.
This year through 2009 will be "crunch years" for borrowing at the two-year-old company before tailing off in 2010, Malik said, declining to give an outlook for needs at the firm.
The global credit crunch, which has seen companies either delay, cut down or cancel borrowing plans as investors recoil from risky assets, has had no direct impact on Aldar, Malik said.
"Still, it's made investors more nervous and we need to take that into account," he said, without being more specific.
In February, Aldar sold $2.53 billion of five-year bonds that comply with an Islamic ban on the payment of interest, offering investors a 5.77% return, or 65 basis points above the US dollar mid-swap rate at the time of pricing.
A $2.1 billion four-year loan, finalised in June, was priced at 90 basis points above the London Interbank Offered Rate. Arranging banks have included Morgan Stanley, Barclays Bank and Credit Suisse.
Through its holdings in Aldar and other companies, Abu Dhabi, the Middle East's third-largest oil producer, is spending billions of dollars on real estate, tourism and cultural projects to help diversify its economy away from oil.
Aldar's profit in the second quarter surged 66.6% on gains in the value of its land holdings, which include waterfront properties around the city of Abu Dhabi. Revenue from operations in the second quarter, equivalent to less than 1.2% of total income, will grow during the next quarters as the company sells homes and rents out more property, Malik said, declining to give details. Source
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