Shares in Dubai developer Damac Properties edged lower during Wednesday’s trading after the company reported a 68 percent drop in third quarter (Q3) 2018 earnings.

Q3 2018 net profit amounted to 230.8 million UAE dirhams, compared to 719.3 million UAE dirhams for the same period last year.

Q3 2018 revenue amounted to 1.54 billion UAE dirhams, which was one-third (33 percent) lower than the 2.29 billion dirhams declared last year.

“Negative results were expected on Damac, but results came lower than the estimates due to a decrease in profitability margins, a decrease in operational profit and an increase in financing costs,” Amer Saqfelhait, AVP trading manager at Al Mal Capital, told Zawya.

Gross profit margins (gross profit/ revenue) stood at 30 percent in Q3 2018. compared to 41.6 percent in Q3 2017, while finance costs increased by 14.4 percent from 73.1 million dirhams to 83.6 million dirhams.

Damac’s stock ended the day 0.49 percent lower and Dubai’s index finished the day mainly flat (0.03 percent higher).

"Despite the drop in Q3 results, buyers absorbed the negativity as the stock is getting stronger on the technical side,” Saqfelhait added.

For the year, Damac’s shares have dropped 37.88 percent. A Thomson Reuters index of UAE real estate shares has declined in value by 26.9 percent since the start of the year as the market has continued to soften as prices decline. (Read more)

The long-running slowdown in Dubai’s residential real estate market will continue next year, but is expected to recover by “end of 2020 or (20)21”, Hussain Sajwani, chairman of Dubai’s Damac Properties said on Monday. (Read more)

According to data from Eikon, one analyst rated Damac’s stock as “Buy”, three analysts rated the stock as “Hold” and two analysts rated the stock as “Sell”.

Elsewhere in the region, Abu Dhabi’s index gained 1.1 percent on Wednesday, while Qatar’s index dropped 1.12 percent, Oman’s index retreated 0.17 percent and Bahrain’s index added 0.43 percent. Kuwait’s market closed for the day as a result of local flooding.

By 15:27 GST, Saudi Arabia’s index was trading 1.12 percent and Egypt’s blue chip index EGX30 was trading 0.51 percent lower.

(Reporting by Gerard Aoun; Editing by Michael Fahy)

(Gerard.aoun@refinitiv.com)

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