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Wed 13 Feb 2008 10:27 AM

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Emaar shares continue to disappoint

Dubai property firm's 20% divedend likely to sour shareholders, analysts say.

Dubai's Emaar Properties, the emirate's worst performing stock this year, said it proposed a 2007 dividend of 0.20 dirhams ($0.054) per share, a move that may disappoint individual investors.

The remaining profit will be allocated to reserves, the largest Arab real estate developer by market value said in a statement on Tuesday on the Dubai bourse Web site.

The Dubai government affiliate also proposed a policy of offering shareholders an annual 20% of profits for the next several years. Shareholders meet on March 19 to discuss the ideas.

"Small investors will be disappointed because they expect surprises to drive up the share price," said Mohammed Yasin, managing director at Shuaa Securities. "Also, what could be perceived as negative is the suggestion that the 20% dividend would be constant."

Last year, a similar 20% cash dividend disappointed investors, sending Emaar shares plunging more than 5% the next day. The stock is down about 24% this year, the worst performance in the Dubai index.

Emaar beat most analysts' forecasts last month with a record fourth-quarter profit of 1.74 billion dirhams ($473.9 million). Earnings per share for the year rose to 1.08 dirhams per share, compared with 1.05 dirhams the year before.

Investment bank EFG-Hermes in January cut its fair value target for Emaar after the developer said profit growth this year would stagnate on higher construction costs for its malls and hotels.

The Egyptian bank lowered its long-term target for Emaar shares to 18.50 dirhams each from 20.04 dirhams, and its earnings-per-share outlook to 1.23 dirhams from 1.63 dirhams following a conference call with Emaar officials.

The stock last traded at 11.30 dirhams. (Reuters)

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