UAE's du surges to four-year high as Dubai extends rally

Shares in du surge 11.7 percent, its biggest gain since April 2012, after strong earnings
By Reuters
Tue 19 Feb 2013 03:04 PM

Dubai telecom operator du makes its largest one-day gain in ten months, surging to its highest close since late 2008 after it posted estimate-beating earnings.

Shares in du surge 11.7 percent to AED4.12, its biggest gain since April 2012.

Du's fourth-quarter profit more than doubled to AED994m (US$270.6m) in the three months to December 31 as it wrote back tax provisions.

UAE telecom operators are taxed via royalties under license agreements with the federal government. The latter announced a new formula in December that includes a levy on revenues as well as profits.

Du had provisioned to pay 50 percent of its profit in royalty fees through the year, but the new formula means it pays less tax as a percentage of profit than 2011, enabling it to write back some of the provisions it set aside in the first nine months of 2012.

The firm has also proposed a cash dividend of AED0.3 per share.

"The surprise was on earnings as well as dividend yield, which at 8 percent is very attractive," says Ali Adou, portfolio manager at The National Investor. "The royalty fee restructuring will be negative for du after three years, but for the time being, the stock looks very attractive."

Dubai's measure rises 1.7 percent to 1,914 points, its highest close since November 2009.

Stocks have rebounded following tentative signs of recovery in Dubai's property sector, but the share index remains about 70 percent below a 2008 peak.

Abu Dhabi's index eases 0.2 percent to close at 2,964 points, down from Monday's 39-month high.

In Doha, Qatar Insurance Co. surges 14.5 percent after the firm announced a 25 percent cash dividend and 20 percent bonus issue for 2012.

Qatar's index slips 0.2 percent to 8,780 points, trimming 2013 gains to 5 percent.

Masraf Al Rayan sheds 3.8 percent, the main drag on the market, as investors sell after the Islamic bank paid out dividends.

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Last Updated: Thu 26 Jan 2017 01:27 PM GST

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