Damas International, the Dubai-based jeweller that listed its shares yesterday on the Dubai International Financial Exchange (DIFX) at US$1 (Dh3.67) per share, expects second quarter profit to rise 20 per cent as sales soar while it expands in the Middle East and Asia. Revenue at the company, which sells jewellery and watches at 438 stores in 18 countries, would increase to more than Dh4 billion this year, said Tawhid Abdullah, the chief executive of Damas, in Dubai yesterday. "We've been achieving an average of 15.5 per cent growth in the past 10 years... and we expect Q2 figures to be at least 20 per cent higher than the same period last year," he said.
Damas had a net income of Dh69.7 million in the first quarter of this year and a revenue of Dh3.58bn last year. The family-controlled company was planning extensive branch expansion and eyeing acquisitions in China after it raised $271m in an initial public offering (IPO) this month, executives said. Damas - which could raise up to $311m if an IPO over-allotment option is exercised - aimed to open about 100 new stores each year for the next few years, Mr Abdullah said. "Jewellery has become more of a lifestyle product now, and there is a culture of buying jewellery in the region," he said at an event that announced the beginning of trading of Damas shares on the DIFX. "The areas we operate in contribute 60 per cent of the world's gold and jewellery consumption."
After selling 27.9 per cent of its stock in the IPO, the company is valued at $968.6m. Damas, which sells 32 of its own brands and 80 other brands, including Tiffany, said the money from the IPO would be used to retire debt, open new stores and fund acquisitions. Damas would spend Dh200m this year to add 131 new stores, said PK Dutta, the firm's chief financial officer. "We'll be looking for small acquisitions in places like China for gold and jewellery manufacturing," Mr Dutta added. Damas could consider a secondary listing after six to eight months, he said.
Mohammed Alami, the head of the international desk at Naeem Shares & Bonds, based in Dubai, said shares in Damas could be good for the right type of investor. "I'm not expecting the stock will perform miracles on its first day of trading," he said. "Investors are not getting value for their money at this P/E [price to earnings ratio], but it is also not expensive. It is a good medium-term holding."
Gold for immediate delivery rose 0.8 per cent, the first time in four days, to $932.04 an ounce yesterday. Gold prices have risen 11.9 per cent this year - even after retreating from a record $1,003.85 an ounce in March - owing to the precious metal's attractiveness as a hedge against inflation and an alternative investment. Damas's gold jewellery sales by tonnage rose eight per cent in the first quarter, said Mr Dutta.
Founded in 1907, Damas now has stores in the Middle East, South Asia, Europe and North Africa, and its revenue has grown an average of 15.5 per cent annually in the past 10 years. The company aimed to increase its share of foreign sales to 50 per cent of revenue from 30 per cent, Mr Abdulla said yesterday. The company also planned to end gold bullion sales, which contributed seven per cent to revenue.
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