Bahrain-based SICO has maintained 'buy' ratings on both Emaar and Emaar Development with target prices of AED 7.1 and AED 6.0 per share respectively, on attractive valuations.
Emaar's portfolio is positioned for double digit growth over FY2021 to 2024, while Emaar Development is likely to significantly improve its margin and cash flow profile, analyst Indarpreet Singh said in the report.
Dubai real estate is well placed to record growth in FY2022 led by visa liberalisation, economic and social reforms, uptick in new business registrations and relocations by high-net- worth individuals, it added.
Emaar Development reported robust Q2-2022 performance with property sales of AED 8.4 billion and a QoQ expansion in gross margins to around 43%," ahead of our expectation".
Emaar’s recurring revenue also remained healthy driven by a 15% QoQ growth in retail operations led by the commencement of Dubai Hills Mall, an increase in blended occupancy to 94%, and record tenant sales at the Dubai Mall.
Emaar Development and Emaar stocks currently trade at a P/B of 1x and 0.7x respectively, with both stocks trading below regional peers and their own long-term averages, according to SICO. "In the midst of a strong real estate upcycle and acceleration in Emaar’s recurring portfolio, we view these valuations as attractive."
Emaar closed over 3% higher at AED5.85 while Emaar Development stock closed a shade higher at AED4.48 on Dubai Financial Market on Tuesday.
(Reporting by Brinda Darasha; editing by Seban Scaria)