x Abu Dhabi, UAEWednesday 17 January 2018

DP World set fairly after price correction

Analysts say ports operator's stock is attractively valued

Since a correction last month when concerns over the euro zone were at their peak in the region, shares have risen in the ports operator DP World have risen 19 per cent. Analysts say the stock is attractively valued and still could rise another 30 per cent. Even in a difficult economic climate, the company generated US$1 billion in earnings for the year to the end of March.

"It is a solid company fundamentally speaking," said Kareem Murad, an analyst at Shuaa Capital based in Dubai. As the global trade cycle is showing signs of recovery from last year, which was a bad one for the industry, volume growth is coming back strong. The company said volumes for the first quarter grew by 6 per cent. DP World stock has been discounted against its global peers because of its association with its parent company Dubai World, which owns 80 per cent.

The port operator's stock is also affected by macroeconomic variables, as last month's correction illustrated. On the flip side, any increase in trade activity or signs of global economic recovery, such as those seen by markets in recent days, bode well for the stock. DP World's long-delayed listing on the London Stock Exchange could be completed by October, after it reports first-half earnings in September, said the Deutsche Bank analyst Nabil Ahmed.

If completed, the listing could provide the second liquidity boost to the stock within months. The merger of NASDAQ Dubai and the Dubai Financial Market, which should be finalised soon, would be the first. That process will provide additional liquidity from regional investors. The London listing would raise the stock's visibility among international investors. In its note this week, Deutsche Bank even predicted an LSE listing could be a catalyst to get DP World included on the FTSE 100, the closely watched index of the largest publicly traded European companies.