Emaar Propertes' shares drop after firm proposes 15% dividend

The company's shares dropped 1.47 percent on Thursday to close at 4.7 dirhams

Emaar Properties' The Address Downtown hotel in Dubai. Photo for illustrative purposes.

Emaar Properties' The Address Downtown hotel in Dubai. Photo for illustrative purposes.

Emaar Properties

Emaar Properties, Dubai's largest listed developer, has proposed a 15 percent dividend for the year 2018, in line with estimates.

In a statement to the Dubai exchange, the company said that its board of directors has recommended to distribute dividends to its shareholders amounting to 1.07 billion United Arab Emirates dirhams ($291 million), or 15 fils per share, which was in line with an estimate by broker Arqaam Capital.

The company announced a full-year net profit for last year of 6.11 billion dirhams, compared to 5.57 billion dirhams for the year 2017, translating into a 9.7 percent increase. Revenues for 2018 stood at 25.69 billion dirhams, compared to 18.75 billion dirhams in 2017 - a 37 percent increase.

Emaar Properties’ book value is close to 1.7 times its market price. The stock price hasn’t been able to match the book value for a long time now,” Issam Kassabieh, senior financial analyst at Menacorp Financial Services, told Zawya by email.

Emaar Properties’ shares dropped 1.47 percent on Thursday to close at 4.7 dirhams, but have risen 13.32 percent so far this year. However, this followed a 37.5 percent decline in value experienced in 2018. (Read more here).

“The company’s dividend is the only way it offers any real value to investors at this stage, investors whom have recorded some losses in capital depreciation,” Kassabieh said.

“Having said that, a 3% yield is quite low compared to peer Aldar, which offered around 9% (upon announcement), and its subsidiaries Emaar Development and Emaar Malls, which are offering a yield above 10% and 5% respectively, Kassabieh said.

Abu Dhabi-based Aldar Properties’ shareholders approved a 14 fils per share cash dividend for 2018. The company’s shares were last trading at 1.88 dirhams on Thursday.

Emaar Development, the real estate development arm of Emaar Properties, proposed a dividend of 26 fils per share and its shares closed Thursday’s trading session down 8.2 percent at 3.92 dirhams.

Emaar Malls, the retail malls subsidiary of Emaar Properties, proposed a cash dividend of 10 fils per share. The company’s stock closed the session up 1.7 percent at 1.78 dirhams. It had announced in February that it has bought the 49 percent stake of website Namshi it did not own in an all-cash transaction worth 475.5 million dirhams ($129.5 million). The initial 51 percent stake was bought by Emaar Malls for $151 million in 2017.

“Investors need short term gains to maintain confidence in the firm (Emaar Properties),” Menacorp’s Kassabieh ended.

A Thomson Reuters index of UAE real estate companies shows that the sector has added 8.94 percent so far in 2019, following a sharp drop of 38.02 percent last year when concerns on oversupply of residential properties weighed on investor sentiment.

“We are selectively positive on UAE real estate despite a challenging market in 2019 with continued (i) price and rental pressure, (ii) supply inflation, (iii) flat tourism and (iv) stagnated expatriate employment,” Arqaam Capital said in a report published on Tuesday.

In its report, Arqaam Capital highlighted Aldar Properties and Emaar Properties as its “top picks” for 2019, but was also positive on the prospects for Emaar Malls and Emaar Development. Arqaam also currenty has a “buy” recommendation on Emaar Properties’ stock with a target price of 6.2 dirhams.

(Reporting by Gerard Aoun; Editing by Michael Fahy)


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