What's up Emaar. Analyst tips small profit driven by higher rental income.
Emaar share price forecast to double
DUBAI // The news out of Dubai is not all bad. Improved revenues thanks to strong occupancy rates at Dubai Mall and the opening of the Burj Khalifa are enough to convince a Cairo brokerage that shares in Emaar Properties will almost double in price. HC Securities and Investment in a recent report maintained its "buy" rating on Emaar with a target price of Dh6.60, up from its current level of about Dh3.40. The firm also revised its earnings outlook, projecting Emaar could eke a profit for last year of Dh43 million compared with a previous estimate of a Dh282m loss. The Dubai developer posted a Dh2.63 billion profit in 2008. Majed Azzam, an analyst at HC Securities, said Dubai Mall was operating at 95 per cent capacity, better than previously expected. That performance combined with the opening of the Burj Khalifa, the world's tallest tower, means Emaar should enjoy higher rental income from its retail and hotel operations this year.
"Considering an expected improvement in tourism activity in 2010 driven by the global recovery, we feel that both retail and hotel occupancy are likely to show improvement this year," Mr Azzam said. The brokerage also revised estimates upwards for the total number of housing units that the developer delivered last year, to 3,900 from a previous estimate of 3,700. Projections for the number of housing units to be delivered this year were revised downwards, to 4,500 from 4,800. However, Emaar plans to hand over several of its Dubai projects this year, which Mr Azzam said should improve the company's revenues. He raised his revenue projections for this year by 12 per cent.
Mr Azzam also downplayed Emaar's Dh1.2bn exposure to Amlak Finance, the embattled home financier that is in the midst of being restructured, and praised the developer's liquidity position. He said the company should have no difficulty meeting its short-term obligations of Dh4.4bn. Emaar shares yesterday closed down 4.3 per cent at Dh3.13. @Email:email@example.com