EFG-Hermes sees stronger H2 show from Emaar - paper

zoom

RATING VIEW: Emaar posted a second quarter loss of AED1.284bn.(Getty Images)

EFG-Hermes has upgraded Emaar to a 'neutral' from 'reduce' rating in the short-term, according to a report.

The investment bank cited Emaar’s better-than-expected second quarter results and its expected stronger performance in the second half, the Khaleej Times daily reported.

EFG-Hermes said that had it not been for the one-off write-down of AED1.697bn for its US subsidiary, JL Homes, Emaar would have reported a solid net profit of Dh413m, nearly three times higher than its own estimate of AED145m.

Emaar posted a second quarter loss of AED1.284bn.

While revenue declined by 65 per cent from a year ago, this was 25 percent higher from the first quarter at AED1.940bn, which again beat EFG-Hermes' estimate of AED1.147bn. Emaar's operating profit of AED458m was also well ahead of EFG-Hermes' estimate of AED127.1m.

According to Khaleej Times, EFG-Hermes also cited Emaar's strong balance sheet. It said the company's total debt in the second quarter decreased by AED1.6bn to AED8.3bn compared to the previous quarter after the writedown related to its US operations.

The long-term 'neutral' rating of Emaar was maintained however due to the lack of visibility regarding its pending merger with the three property companies controlled by Dubai Holding, the daily added.

"We are not yet buyers of Emaar as the visibility regarding its potential merger with the three Dubai Holding entities remains weak. Until greater disclosure on the merger is made available, we believe an overhang will persist on the stock," said EFG-Hermes.

Print | Email | Discuss this article

| Share |

READERS' COMMENTS

Stronger Q2 based How & why
Posted by Tajer, Dubai on Sunday 23 August 2009 at 12:22 UAE time


How in the world can you have better Q2 when there is no demand for real estate in GCC , when the cost of financing is going up , when projects are being sold on minimum or no profit , when supply outstrips demand exponetially , when rents are crumbling and real estate has still to see a bottom , I am amazed at the so called crystal ball financial soothesayers who cannot back there comments with hard facts we do understand economics too.

Dr Williams
Posted by M, Dubai on Saturday 22 August 2009 at 14:18 UAE time


There are many ways to play around the balance sheet to show profit or loss, everybody does that. Do you really think all these better than expected earnings in the US and Europe are because of solid business growth? Of course not, it's a combination of cost cutting and smart accounting. The governments are also supporting them. For instance, why do you think the US government was involved in changing the mark-to-market accounting rule, basically to avoid marking the assets at the current marketing rates.
So i'm pretty sure that Emaar has followed the same approach. Honestly, i don't blame them, the whole world is doing this right now to survive, so we shouldn't expect Emaar to be any different.

emaar balance sheets
Posted by dr william von stauffenberg, jeddah, ksa on Saturday 22 August 2009 at 09:46 UAE time


perhaps technically qualified accountants used to doing the work of private corporations should inspect the financial statement discussed. many seem to think that one could view this statement in many ways due to the reality of the facts behind the statement itself

Click here to post a comment

Add your Comment All posts are sent to the administrator for review and are published only after approval. ArabianBusiness.com reserves the right to remove any comment at any time for any reason. Please keep your responses appropriate and on topic. Arabian Business would like to point out that only comments relevant to the story will be published. Any containing personal insults or inappropriate language will not be approved.
Name *
Remember me on this computer
Email *	(Your email address will not be published)
City
Country
Subject *
Comment *
Notify me of further comments
Enter the words above *
Please click post only once - your comment will not be published immediately.

MORE FROM ARABIANBUSINESS.COM