Growth forecast for Emaar over the next 5 years
Reiterating its positive outlook over the regional property major, Bahrain's Securities & Investment Company rated Emaar Properties, the largest listed company on the Dubai Stock Exchange, with an 'overweight' rating and fair value of AED18.40, presenting a 67 per cent upside to its current market price.
SICO forecast the Emaar net profits to grow at a Compound Annual Growth Rate of 15 per cent over the next five years. The company with an estimated project book of AED391 billion was well positioned to benefit from the impending construction boom in the developing countries targeted by it. Projects initiated by associate companies namely Emaar MGF and Emaar Economic City, those planned by subsidiaries mainly in Egypt, Morocco, Pakistan, Libya and Saudi Arabia, sustainable revenue inflow from the Mall and Hospitality Groups and differentiated UAE-based projects would fuel the growth.
The 16-page report highlights that Emaar properties announced a remarkable rise of 46 per cent in its Net Asset Value (NAV), which surged from AED70.35b (AED11.55/share) in 2006 to AED102.89b (AED16.89/share) in a span of just one year. The difference between the book value and fair value implies that an amount of AED66.36b (AED10.86/share) remains as unrealised potential gain on Emaar's books. SICO said Emaar's strategy to refrain from land sales had become a cause of concern among the market participants during 2007.
The report also underlines that increasing expenses led to muted growth in profits. The benefits of these expenses were likely to be more qualitative in nature providing Emaar with the first mover advantage in these markets and helping to build a stronger brand. (Bahrain Tribune)
SICO forecast the Emaar net profits to grow at a Compound Annual Growth Rate of 15 per cent over the next five years. The company with an estimated project book of AED391 billion was well positioned to benefit from the impending construction boom in the developing countries targeted by it. Projects initiated by associate companies namely Emaar MGF and Emaar Economic City, those planned by subsidiaries mainly in Egypt, Morocco, Pakistan, Libya and Saudi Arabia, sustainable revenue inflow from the Mall and Hospitality Groups and differentiated UAE-based projects would fuel the growth.
The 16-page report highlights that Emaar properties announced a remarkable rise of 46 per cent in its Net Asset Value (NAV), which surged from AED70.35b (AED11.55/share) in 2006 to AED102.89b (AED16.89/share) in a span of just one year. The difference between the book value and fair value implies that an amount of AED66.36b (AED10.86/share) remains as unrealised potential gain on Emaar's books. SICO said Emaar's strategy to refrain from land sales had become a cause of concern among the market participants during 2007.
The report also underlines that increasing expenses led to muted growth in profits. The benefits of these expenses were likely to be more qualitative in nature providing Emaar with the first mover advantage in these markets and helping to build a stronger brand. (Bahrain Tribune)
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