GGICO has underperformed Dubai stocks for some time now, but some analysts said the stock was now attractively priced.
DFM-listed GGICO shows signs of vitality
Could Gulf General Investment Company (GGICO) be due for a turnaround?
The stock has been the worst-performing on the Dubai Financial Market this year, declining by 53.2 per cent since the start of the year as the continuation of a protracted slump since it hit a high of Dh8.33 in August 2008. The stock has languished at about 50 fils for much of the past few months.
But yesterday, GGICO's share price jumped 4.89 per cent to 51.4 fils after third-quarter results showed the company had more than doubled its profit compared with last year's third quarter.
GGICO has suffered from a slowdown in the property and financial services sectors, and was hit by write-downs of Dh55 million in the first quarter of this year.
"The slump is because of lack of activity," said Vyas Jayabhanu, the head of investments at Al Dhafra Financial Broker. "In our dealing room, maybe only one customer looks at [GGICO]."
Investors felt the stock had little left to offer, he said. "Let's put it this way: once the markets turn around as a whole, that'll be one of the last stocks to react, unless they've got something new coming."
News that GGICO plans to issue a five-year bond, which could be worth about $500m, had done little to move markets, he said.
However, Martin Kohlhase, an analyst at Moody's Investors Service, said GGICO's improved performance was a good sign for a recovery in Dubai's economy.
The strong increase in profit was "probably a reflection of the Dubai economy growing again, albeit moderately", Mr Kohlhase said. GGICO has traditionally reported stronger earnings in the second half of the year, he said.
Moody's has given GGICO a "B1" rating with a negative outlook.
Fitch Ratings formerly covered the company but had withdrawn its ratings coverage, said a Fitch analyst, who declined to elaborate.