The solid profits announced by Emaar Properties on Friday could point to more good news this week. The Dubai developer's earnings surpassed analysts' expectations and could be a much-needed catalyst for regional markets that have been in the doldrums for several weeks. Analysts expect RAK Properties, Deyaar Properties, National Bank of Abu Dhabi, Sorouh Real Estate and Aldar Properties to file their results to the Abu Dhabi Securities Exchange (ADX) this week, although companies are not obliged to post specific deadlines. They also anticipate earning reports from du.
Emaar reported on Thursday a jump of 152 per cent in net operating profit to Dh760 million for the first quarter. As a result, most expect Emaar to inject life into trading early this week. On Friday, its shares rose 2.8 per cent to Dh3.94. "Emaar, with a [price-earnings] ratio of 7, is lower than its sector [at 10]," said Saad al Chalabi, an institutional trader at Al Ramz Securities based in Abu Dhabi. "They also haven't booked profits of Khalifa Tower yet. If they book that profit, the price will have upside potential."
While Emaar has not yet released full financial statements, UBS and Credit Suisse analysts attributed its solid results to its rental and hospitality portfolio, including Dubai Mall. UBS maintained a "sell" rating on the shares at a target price of Dh2.50, while Credit Suisse kept its "outperform" rating at a target price of Dh5.25. The Dubai Financial Market (DFM) General Index finished last week down 1.1 per cent, falling to 1,754.96, while the ADX General Index eased 0.4 per cent to 2,815.08.
The DFM General Index had some turmoil last week, after a US civil fraud lawsuit was filed against Goldman Sachs, the Wall Street investment bank, over mortgage instruments. Weak oil prices, along with a generally negative sentiment on global airlines, also weakened sentiment. "The Goldman Sachs issue affected markets globally, and with the airline situation, it caused a massive negative sentiment," Mr al Chalabi said. "At the end of last week, global markets had selling pressure, hitting our markets on Sunday, and just sold off the whole day. Volumes on the DFM index then started drifting until it ran out."
Trading volume in Abu Dhabi was less than a third of that in Dubai. On Thursday, for example, 30.1 million shares were traded on the ADX, while 159.4 million shares changed hands on the DFM. Diminishing volumes led companies such as Etisalat and Aldar Properties to trade sideways, Mr al Chalabi said. Stocks of both companies were flat for the week. Banks helped sentiment in the capital with encouraging results, Mr al Chalabi said.
Abu Dhabi Islamic Bank last Monday posted an increase in net profit of 9.3 per cent to Dh293.3 million for the first quarter compared with the same period last year, and the bank's shares ended trading for the week 3.4 per cent higher at Dh3.21 each. First Gulf Bank said profits in the latest quarter rose by 23 per cent from the year earlier to Dh920m. Its shares firmed 0.7 per cent to Dh19 each last week.
"These are phenomenal results, which can at least mitigate some of that negative sentiment from mostly foreign analysis on UAE banks," Mr al Chalabi said. "Everybody is still afraid of [Abu Dhabi Commercial Bank's] and [Dubai Islamic Bank's] exposure to Dubai World and the extent of non-performing loans from their retail business," he added. Elsewhere in the region last week, the Saudi Tadawul All-Share Index lost 1.6 per cent to 6,730.12. Saudi Basic Industries Corporation's earnings received mixed response as it said on Monday it swung to first quarter earnings of 34 billion riyals from a loss for the same period a year earlier. But its shares ended the week 2.5 per cent lower at 100 Saudi riyals each.
Analysts speculated that weakened global markets and lower oil prices helped push the stock down despite its good results. Saudi Telecom, the Arab world's largest phone company, reported on Tuesday a drop of 29 per cent in earnings. Its shares fell 9 per cent, dragging the index down with it. Qatar's DSM20 advanced 1 per cent to 7,642.95 last week. It was announced that the DSM20 will be renamed "QE" and have a new landscape of listed companies as of May 6 to bring Qatar closer to the MCSI Emerging Markets indexes.
Barwa Real Estate, which owns Qatar Real Estate Investment after a merger, on Monday posted an 8.25 per cent increase in profit in the year's initial quarter from the previous year to 210m rials. Its shares closed the week with a gain of 5 per cent to 35.80 rials. firstname.lastname@example.org