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A massive fall in Aldar Properties' third quarter profit compared to the previous quarter has raised concerns over the state of the emirate's real estate sector, investment manager Al Mal Capital said on Monday.
Abu Dhabi's largest developer by market value on Sunday posted Q3 net income of 760 million dirhams, up 50 percent compared to the same period last year.
However, quarter-on-quarter profit plunged 39 percent from 1.23 billion dirhams and revenue slumped 35 percent from 1.4 billion dirhams to 920 million dirhams.
"We are concerned about the potential immediate impact that a softening real estate market and poor global credit conditions will have on land sales," Al Mal said in a research note.
"However, once the current economic crisis calms, we believe there is attractive long-term value for investors at current levels."
Al Mal slashed its target price on the real estate giant, which is developing the 2,500 hectare Yas Island project off the coast of Abu Dhabi, from 12.95 dirhams per share to 8.26 dirhams.
Aldar was trading at 4.73 dirhams as of 0934 GMT, down 9.04 percent on the day. The company's stock price is down 60.83 percent year-to-date.
Robert Mckinnon, analyst at Al Mal in Dubai, said the firm’s results over the third quarter was not only down to a seasonal slowdown, pointing to weak land sales and market volatility.
"The scale of the decline is more than seasonal in my opinion. Transactions slowed in September when credit conditions deteriorated really very quickly. Land sales were also weaker,” Mckinnon told Arabian Business.
Aldar could not immediately be reached for comment.
New CEO John Bullough said the company had delivered "very strong results" in a statement announcing its earnings.
"We have delivered very strong results in the first nine months of 2008 and continue to perform in line with our expectations," Bullough said. "The profit growth was driven primarily by increase in sales revenues."
