Shares in Waha Capital dropped to their daily limit on Thursday, after the company reported lower fourth quarter (Q4) earnings for 2018.
Q4 2018 net loss attributable to shareholders amounted to 150.1 million UAE dirhams ($40.9 million), compared to a net profit of 158.1 million UAE dirhams for Q4 2017.
“The company announced weak results in Q4 and a drop in their income for the whole year of around 32 percent, impacting the shares' profitability (net profit/total income) which was reduced from 23 fils in 2017 to 8 fils in 2018,” Amer Saqfelhait, trading manager of capital markets at Al Mal Capital, told Zawya.
For the whole of 2018, Waha Capital recorded a net profit attributable to shareholders of 145 million UAE dirhams, a 66 percent decline on the 425.9 million UAE dirhams profit for 2017.
Total income for 2018 amounted to 823.2 million UAE dirhams, a 28 percent decline on income of 1.15 billion UAE dirhams for 2017.
Al Mal Capital’s Saqfelhait added that the dividend announced for 2018 is “weak”. Waha Capital said it has proposed a full year 2018 cash dividend of 7.5 percent, down from 15 percent in 2017.
The company’s shares stopped trading at around midday after hitting a 10 percent loss limit, dropping to 1.62 UAE dirhams, dragging Abu Dhabi’s index to close 0.6 percent lower. Waha’s shares have dropped 19 percent so far in 2019.
“Lower profitability and dividend cut were the main reasons for the stock’s correction today,” Harshjit Oza, vice president of research at Shuaa Capital, told Zawya by email.
Waha’s stock appears to be oversold after today’s session, according to the Relative Strength Index (RSI 14). The index is a measurement between zero and 100. Traditionally, the a stock is considered overbought when RSI is above 70 and oversold when below 30.
Data from Thomson Reuters’ Eikon shows that the stock has an RSI of 29.539. At the end of yesterday’s session, the stock’s RSI was of 49.934.
The company announced in October 2018 that it “has acquired a significant minority stake in Dubai-based Petronash Holdings, a global oilfield services and manufacturing company”. The amount of the acquisition was of $88 million.
Elsewhere in the region, Dubai’s index dropped 0.56 percent on Thursday, Saudi Arabia’s index fell 0.24 percent, Qatar’s index fell 1.67 percent, Kuwait’s premier market index was mainly flat while Oman’s index edged 0.21 percent and Bahrain’s index gained 0.66 percent.
(Reporting by Gerard Aoun; Editing by Michael Fahy)
© ZAWYA 2019