Emaar shares in sharpest fall for more than eight months as dividend disappoints

Shares in Emaar Properties suffered their biggest fall in more than eight months on Tuesday as Dubai’s biggest listed property developer disappointed investors with a dividend of 15 fils per share.

Emaar shares fell 3.8 per cent in the day’s trading. It was their biggest fall since June 26, the first trading day in the Middle East after the UK’s Brexit vote sent stock markets worldwide into free fall.

“We believe that this is just a temporary fall in Emaar’s share price due to the disappointment with the proposed dividend, and we are suggesting to our clients that the story for 2018 and 2019 is likely to be better than for other developers,” said Sanyalak Manibhandu, the head of research at NBAD Securities.

At Tuesday’s closing price of Dh7.36, the proposed dividend for 2016 of 15 fils per share works out to a payout ratio of 2 per cent.

In comparison, two other companies’ dividend plans that were also released on Tuesday by the Dubai Financial Market showed higher payout ratios: the cooling company Tabreed raised its dividend to 6.5 fils per share from 6 fils, bringing its payout ratio to 3.5 per cent at Tuesday’s close. And the bank Mashreq kept its dividend constant at Dh4 per share – a payout ratio of 5.3 per cent.

Emaar’s unexpectedly small dividend – the same amount as for the previous year – came despite the company making higher profits than expected last year.

Last month Emaar reported that net profit for the three months to the end of December 2016 increased 56 per cent, climbing to Dh1.61 billion from Dh1.03bn a year earlier as the company benefited from the reversal of a Dh301 million loss booked against The Address Downtown Dubai hotel the previous year on the back of an insurance payout.

“With new retail districts at its developments and launch of The Tower in Dubai Creek Harbour, Emaar will continue to generate significant value for its stakeholders,” Emaar said in an upbeat statement to the Dubai Financial Market.

Emaar said its strategy this year would be defined by launching new projects at its large developments such as Dubai Hills, Dubai Creek Harbour, Downtown Dubai and Emaar South.

On Monday, the Emaar chairman Mohamed Alabbar said he hoped 2017 would be a better year after a “tough” 2016 for the company.

On Tuesday Emaar published its consolidated results showing that revenue from villa sales more than doubled last year compared with a year earlier.

The developer said revenue from villa sales increased by 55.6 per cent to Dh4.15bn in 2016 from Dh2.66bn a year earlier.

At the same time, Emaar said that revenue from apartment sales increased by 13.9 per cent to Dh4.08bn from Dh3.56bn a year earlier.

And the amount of money the company received in rents from its leasing portfolio of homes, offices and shops increased by 10.4 per cent to Dh4.54bn from Dh4.11bn in 2015.

However, the developer said the amount of money it made from selling commercial units and plots of land fell by 18.8 per cent to Dh1.34bn from Dh1.68bn a year earlier.

And revenues from the company’s hotels portfolio also fell by 14.3 per cent to Dh1.44bn from Dh1.68bn as it was forced to keep the Address Downtown Dubai closed following a fire at the property on New Year’s Eve 2015.

The news comes as some property brokers are starting to forecast the bottom of the current Dubai housing market cycle.

Last month Asteco became the latest property broker to forecast an increase in average house prices this year after two years of declines. It calculated that average sales prices increased in Business Bay, DIFC and International City during the final three months of 2016, even as they fell in Downtown Dubai, Dubai Marina and JBR.

Other brokers continue to forecast price falls for the remainder of 2017, with Phidar Advisory and Cluttons predicting further gradual softening.


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