x Abu Dhabi, UAE Thursday 20 July 2017

Aabar undervalued as asset base grows

Depsite a 40 per cent rally in the last month, the company which now owns a 32 per cent stake in Virgin Galactic, is still under-valued, analysts say.

Aabar Investments, the Abu Dhabi government-backed company with interests from sports cars to space travel, has grabbed the attention of local investors seeking elusive returns from turbulent markets Depsite a 40 per cent rally in the last month, the company which now owns a 32 per cent stake in Virgin Galactic, is still under-valued, analysts say. Al Mal Capital said yesterday it was updating its net asset value on Aabar given the significant gains in the company's investments in listed equities, especially its 9.1 per cent stake in Daimler, the world's second-largest maker of luxury cars.

Aabar has been busy diversifying its asset base in the past month, investing in Tesla Motors, a joint venture with Austria's Berndorf and most recently paying $280 million (Dh1.03 billion) for a 32 per cent stake in UK billionaire Sir Richard Branson's Virgin Galactic commercial space project. The company last month committed to spending $100 million and transaction costs to fund a small satellite launch capability, subject to the development of a full business plan.

"Even if you write off Aabar's real estate investment and ascribe zero value to its other investments, its stake in Daimler makes it compelling," said Bobby Sarkar, equity research analyst at Al Mal Capital Research. In March, Aabar purchased a 9.1 per cent stake in Daimler, saying then it would pursue joint strategic projects. Richard Frost, head of equity research sales at Futtaim HC Securities, said Aabar's shares would probably continue to rally.

"Simply on its stake in Daimler, you are looking at a 50 per cent discount of Aabar to the value of Daimler, that is a bit excessive," he said. Al Mal said its "bear-case scenario" of the company still valued it at Dh2.99 per share. The company closed 3 per cent lower yesterday at Dh2.54. Aabar is an investment company controlled by the International Petroleum Investment Company (Ipic), which is wholly owned by the government of Abu Dhabi.