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Thu 4 Mar 2010 12:52 PM

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EFG-Hermes initiates DP World with ‘buy' rating

Port operator assigned a price estimate of 56 cents, implying 47% 'upside potential'.

EFG-Hermes initiates DP World with ‘buy' rating
PORT PLAYER: DP World is Middle East’s biggest port operator. (Getty Images)

DP World Ltd gained the most in almost two months after the Middle East’s biggest port operator was rated “buy” in new coverage at EFG-Hermes Holding SAE.

The shares rose 6.9 percent, the most since Jan. 18, to 40.5 cents as of 12:21 p.m. in Dubai.

The report cited DP World’s prospects after parent company Dubai World reaches an agreement with creditors. Dubai World, one of the emirate’s three main state-owned business groups, said Nov. 25 it would seek to delay repaying debt until at least May 30, roiling global markets and causing the cost to protect against a default by Dubai to double.

DP World’s share price has “succumbed to selling pressure as investors are wary of the future of DP World’s assets in light of the parent company debt restructuring,” the report said. “This selling pressure can be reversed by more clarity on DW debt restructuring.”

Zawya Dow Jones reported on Feb. 14 that Dubai World may offer creditors 60 cents on the dollar after seven years. A spokeswoman for the emirate that day said neither the government nor Dubai World had made such an offer. Dubai World will present a proposal to creditors this month after its advisers complete valuing its assets, a person close to the Dubai government said Feb. 17.

EFG-Hermes assigned the Dubai-based operator a price estimate of 56 cents, implying 47 percent “upside potential,” analysts wrote in the e-mailed report today.

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