Shares in GFH Financial continue rebound, analyst says "stock is oversold"

GFH was the most actively-traded stock on the Dubai market, as company's shares rise for second day in a row

Shares in GFH Financial continue rebound, analyst says "stock is oversold"

Shares in GFH Financial Group rose for the second session in a row on the Dubai Financial Market (DFM) on Thursday, as the stock was the most actively-traded by value on the exchange.

The company’s stock rose 5.49 percent on Wednesday and 0.71 percent on Thursday. It last traded at 0.852 UAE dirhams. Dubai’s stock market ended the day 0.13 percent higher.

“If you look at the performance overall this year, it has fallen quite a lot - especially within November and December, as margin calls increased as a result of the market drop led by real estate stocks,” Issam Kassabieh, senior financial analyst at Menacorp, told Zawya by email.

Data from Eikon shows that GFH, which is an investment bank headquartered in Bahrain whose shares are traded on the Dubai, Bahrain and Kuwait stock markets, has dropped 43.2 percent so far on DFM since the start of 2018, outperforming Dubai’s stock market index, which has declined in value by 26.72 percent as a drop in property stocks has weighed on the index.

During the month of November, GFH lost 10.32 percent and dropped 24.6 percent so far in December. The stock had lost on Tuesday this week, close to 10 percent, before rebounding on Wednesday and Thursday.

The company released a statement on Wednesday clarifying that the recent slide in their shares is “primarily due to the international and regional market pressures and margin calls that have impacted investors in the stock markets”

The statement assured investors that GFH “enjoys a sound financial position and its performance remains strong” and that “performance growth is expected to continue for this year and the upcoming years in line with the business plan and targets” set earlier in the year.

Menacorp’s Kassabieh noted that he believes “at this time the stock is oversold”.

GFH’s stock appears to be oversold overall, according to the Relative Strength Index (RSI 14). The index is a measurement between zero and 100. Traditionally, the RSI is considered overbought when above 70 and oversold when below 30.

Data from Thomson Reuters’ Eikon shows that the stock has an RSI of 22.071.

The company's shares listed on the Bahrain Bourse have declined by 44 percent in the year-to-date, which is considerably steeper than the index's 1 percent decline for the year to date.

“The company has exited some investments this year in addition to being awarded cash from legal settlement, this is expected to support financials for the full year,” Kassabieh said.

In October, the company announced that it had successfully sold its stake in the “Lost Paradise of Dilmun" waterpark in a deal worth $60 million.

“The waterpark is one of the key components of Al Areen development, located in the southern region of the Kingdom of Bahrain next to the Formula One track with a township spreading over two million square meters," the company said in a statement announcing the deal. "The Waterpark is one of the largest standalone water park(s) in the Middle East and the largest in Bahrain."

In May this year, GFH also said that it agreed a settlement on an outstanding legal claim, which led to it receiving a cash settlement worth $22.5 million. For the nine months to September 30, the company reported an 18.6 percent increase in profit attributable to shareholders of $103.4 million, as total income increased by 13 percent to $184.6 million.

Elsewhere in the region, Abu Dhabi’s index rose 0.29 percent, Kuwait’s premier market index edged 0.19 percent higher, Oman’s index gained 0.42 percent, while Qatar’s index added 0.63 percent and Bahrain’s index added 0.3 percent.

By 15:08 GST, Saudi Arabia’s index was trading 0.72 percent higher and Egypt’s blue-chip index EGX30 was 1.3 percent higher.

(Reporting by Gerard Aoun; Editing by Michael Fahy)


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