Playing with the markets

When you run a US$40 billion property empire, which reports a surge in profits of 180% in the space of twelve months, you would think that’s good enough reason to celebrate. At least that’s what Emaar chairman Mohammed Alabbar must have thought. But how wrong he was.

Last week Emaar announced a staggering US$1.3 billion worth of profits. Add to that the fact that the company’s current projects include the iconic Burj Dubai tower, which when completed in 2008 will be the world’s tallest building, there can be little doubt that Emaar is now one of the world’s greatest property companies — and brands. None of which squares up with the fact that Emaar’s shares last week crashed to their lowest point in six months — just US$5.44 each. Last summer they were US$12.8 to buy.

The concern in the markets is that when the results are examined more closely, they reveal that the company has actually reported a third consecutive quarterly decline in profits. Last year may have seen a net profit of US$283.1 million, up 60% on the previous year. However, that figure is actually down 11.9% from the previous three months.
The real fear in the market is that delivery times have slipped — though there is no hard evidence of this. Some analysts are, almost bizarrely, “disappointed” with the US$1.3 billion figure. They expected US$1.4 billion, and point out that US$100 million of profits came from the sale of Dubai Bank.But deep as you look into the figures, there is no fundamental problem with Emaar.

Its cash flow is good, and its asset base is growing almost monthly by the billions. The company also has Mohammed Alabbar at the helm.

His leadership has helped create the empire from complete scratch less than ten years ago. Alabbar has been through his fair share of scraps in recent months, and has understandably been keeping a relative low profile. But if he is confident that Emaar’s winning streak will continue – whatever the markets and analysts may think – we should believe him.||**||DIFX deserves its boost|~||~||~|The Dubai International Financial Exchange has taken a bit of a battering in recent months. Since going live in September 2005, many financial experts have pointed out that there hasn’t exactly been a tidal wave of share trading activity. In fact, not even a ripple.

Such criticism is unfair. You only have to take a glance at the whole Dubai International Financial Centre project to realise that this is going to be a world class operation. And as DIFX bosses have been telling us for months, “be patient.”

Their own patience was finally rewarded last week when Prince Alwaleed’s Kingdom Hotel Investments announced that it will seek a listing on the DIFX. This is sure to be a multi-billion dollar flotation, which investors from around the world will be eager to get a slice of. It is a decision that Prince Alwaleed should be applauded for.
And more importantly, it will finally propel the DIFX onto the world stage, where it deserves to be. ||**||Good news is bad news|~||~||~|Etisalat chairman Mohammed Omran has once again delivered the goods. Last week, the UAE’s state-owned telecoms operator announced that revenues increased to US$3.51 billion, an increase of 23% over the previous year. Net profits increased to US$1.17 billion, up by 25% from 2004.

In the UAE, mobile connections increased by 23 per cent to reach 4.5 million lines — representing a penetration rate of 98%, which is comparable to the situation in most advanced countries. Internet connections — including high-speed access — crossed the half million mark during 2005, and SMS messages reached almost 1.3 billion.

But as our YouGov survey reveals this week, nearly two thirds of Etisalat customers are planning to switch to another telecoms provider once competition comes in. This is a worrying development — one that we have no doubt the very brilliant Omran will be able to deal with.||**||