Investors punished Aramex yesterday, the day after the transporter reported earnings just short of analysts' expectations.
Given the lengthy rally in Dubai share prices over the past six weeks, the movement may indicate traders have priced in solid results and even the slightest disappointment can act as a catalyst for selling shares and collecting profits.
Aramex, based in Dubai, said on Monday its third-quarter net profit rose 12 per cent to Dh46.7 million compared with the same period last year. Analysts had forecast a profit of about Dh48m.
The company also posted net revenues of Dh545m, up 12 per cent from the third quarter last year.
"Our solid results for this quarter are in line with our expectations, which mark the third consecutive quarter with double-digit revenue growth and are a continuation of the company's strong historical performance across all markets and operations," said Fadi Ghandour, the Aramex founder and chief executive.
Aramex shares dropped 2.3 per cent yesterday, to Dh2.17, its largest drop in four weeks.
Since June, the stock is up more than 50 per cent as many investors perceived it to be undervalued.
The company, which competes with global couriers such as FedEx, UPS and DHL, was forced this month to announce it was not looking to be acquired after rumours surfaced that a possible takeover was behind the rise in the share price.
Although Aramex shares began rising before the rest of the market, the Dubai Financial Market (DFM) General Index is ahead more than 17 per cent since August 31, with few bouts of profit taking.
That sort of sustained rise is unusual and suggests shares are susceptible to declines if companies fail to meet earnings expectations.
Investors will be watching particularly closely for results from Emaar Properties, the Dubai bourse's largest company and a bellwether for the property sector in the UAE. Emaar dropped 1 per cent yesterday to Dh3.84.
The DFM yesterday lost 0.5 per cent to 1,744.63, and the Abu Dhabi Securities Exchange dipped 0.2 per cent to 2,826.30.
