Emaar retreats as dividend proposal disappoints
Source: BI-ME with Bloomberg , Author: Posted by BI-ME staff
Posted: Tue March 20, 2012 1:41 pm

UAE. Emaar Properties retreated the most in two weeks after a 10 fils cash dividend for 2011 proposed by the board of the United Arab Emirates’ biggest developer fell short of investor expectations.

Emaar, developer of the world’s tallest tower in Dubai, slumped 2.6%, the most since March 7, to AED2.97 at the 2 p.m. close in the emirate.

The decline dragged Dubai’s DFM General Index 1.5% lower to 1,643.31. Emaar also paid a 10 fils dividend for 2010 after it hadn’t initially proposed one. That decision was made after a heated three-hour meeting between shareholders and executives.

“There were speculations about dividend as high as 15 fils,”  Dubai-based Fadi Al Said, who oversees US$250 million as senior investment manager at ING Investment Management for the Middle East and North Africa, told Bloomberg.

“Since the company maintained the dividend, it may be a positive sign that it’s comfortable with its financial position.”

Emaar, owned 31% by Dubai’s government, didn’t distribute dividends in 2009 and 2008, according to data compiled by Bloomberg. Its profit plunged 89% and 54% those years, respectively, as the company that derives more than 90% of revenue domestically suffered when Dubai’s real-estate crash dragged home prices down 65 percent from a mid-2008 peak. 

The developer said last month its fourth-quarter profit more than doubled to AED716 million (US$195 million), beating analysts’ estimates. Recurring income from hotels and malls grew to 41 percent of revenue last year compared with 24% in 2010.

The shareholders are scheduled to meet on April 23 to discuss the dividend proposal, the company said in a statement to the Dubai Financial Market today. Emaar said yesterday that it may expand its board to 11 members from eight and replace four directors.

Emaar’s shares have gained 16% this year compared with a 21% advance for the benchmark Dubai Financial Market General Index. Fifteen analysts recommend investors buy Emaar shares, two have a hold rating and one a sell recommendation, according to data compiled by Bloomberg.

 

MIDDLE EAST BUSINESS COMMENT & ANALYSIS

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INTERNATIONAL. Participants in the global oil market are eagerly awaiting the Opec meeting on November 27, which could potentially set the tone and the direction of oil prices.
INTERNATIONAL. In the end, it is unlikely that the territorial Islamic State can survive. The truth is that Turkey, Iran and Saudi Arabia are all waiting for the U.S. to solve the problem with air power and a few ground forces. These actions will not destroy IS, but they will break the group's territorial coherence.
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