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|13 March, 2019

Dubai Investments announces 10% dividend, shares surge

Dubai Investment's shares were trading 3.82% higher on Wednesday

An investor (L) gestures to an electronic display board at the Dubai International Financial Market, March 24, 2010.

An investor (L) gestures to an electronic display board at the Dubai International Financial Market, March 24, 2010.

REUTERS/Mohammed Salem

The board of directors of Dubai Investments (DIC) has proposed a 10 percent cash dividend for the year 2018, which pushed the company’s shares higher on Wednesday.

“I think the 10% (cash dividend) is a fair dividend at this time as it stands attractive (above 7% yield),” Issam Kassabieh, senior financial analyst at Menacorp Financial Services, told Zawya by email.

In a note to the Dubai Financial Market (DFM) in late February, Dubai Investments confirmed that its chief executive officer, Khalid Bin Kalban, told Arabic daily newspaper Al Bayan in an interview that the company’s dividend for 2018 would be 'close' to the 2017 dividend. In 2017, the company distributed a 12 percent cash dividend. (Read more here).

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The company’s stock was last trading 3.82 percent higher on Wednesday at 12:54 GST and was the most traded stock on the exchange, alongside Aramex. Together, the pair grabbed more than half of the trading volumes on DFM. DIC’s shares have now added 7.94 percent since the start of the year, according to data from EIkon.

“Also, investors were somewhat relieved now that they have seen the financial statements that prove a significant increase in sales and that the main factor that weighed down on the P&L (profit and loss statement) was the lower gains on fair value of investments,” Kassabieh added.

DIC reported a net profit of 651.4 million United Arab Emirates dirhams for 2018, compared to 1 billion dirhams for 2017, translating into a 34.9 percent drop.

The company’s revenue stood at 3.05 billion dirhams in 2018, compared to 2.78 billion dirhams in 2017, a 9.7 percent increase.

DIC’s financial statements showed that the net gain on fair valuation of investment properties dropped sharply in 2018 to 101.9 million dirhams, from 645.6 million dirhams in 2017.

“Yes, there would have been a drop either way in the profits due to lower profit margins observed in rising costs but it would still not be enough to justify the major drop the stock has seen over the past months,” Kassabieh said.

Data from Eikon shows that DIC’s shares dropped 47.93 percent in 2018.

“Also the cash flow statements look better from an operational point of view with more cash coming in 2018 and with the company clearly eyeing and reaching out to more investments, this signals continuity and clear strategy,” Kassabieh said.

Cash flow from operating activities amounted to 343 million dirhams in 2018, compared to a negative cash flow of 62 million dirhams in 2017.

(Reporting by Gerard Aoun; Editing by Michael Fahy)

(gerard.aoun@refinitiv.com)

Our Standards: The Thomson Reuters Trust Principles

Disclaimer: This article is provided for informational purposes only. The content does not provide tax, legal or investment advice or opinion regarding the suitability, value or profitability of any particular security, portfolio or investment strategy. Read our full disclaimer policy here.

© ZAWYA 2019

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