|
Dubai: Investment bank EFG-Hermes cut its fair value target for Emaar Properties on Monday after the Dubai-based developer said profit growth this year would stagnate on higher construction costs for its malls and hotels.
The Egyptian bank lowered its long-term target for Emaar shares to Dh18.50 ($5.04) each from Dh20.04, and its earnings-per-share outlook to Dh1.23 from Dh1.63 following a conference call with Emaar officials.
Shares in Emaar dropped almost six per cent on Monday to Dh12.30.
"Group revenues and net profit in 2008 to grow in line with 2007 level," the largest Arab property developer by market value said on its website following the call with investors.
"Pre-operating expenses in hotels, malls and higher marketing costs will offset profitability generated by international revenue, malls and hotels," the company said.
International operations
Emaar profit last year rose 3.5 per cent to Dh6.58 billion, the slowest pace in at least four years.
EFG-Hermes, which lowered its short-term recommendation to "accumulate" from "buy", forecast Emaar's profit would rise 14.7 per cent to Dh7.51 billion this year.
"This is above the 2008 guidance provided by the company as we believe Emaar has left itself room to surprise positively," EFG-Hermes analyst Stefan Schurmann wrote in the note, keeping his long-term 'buy' recommendation on the stock.
Schurmann could not immediately be reached for comment after Emaar changed the wording of its presentation to indicate that profit and revenue this year would grow at about the same pace as 2007.
International operations could account for between 30 per cent and 35 per cent of revenue this year, led by projects in India, Egypt, Morocco and Turkey, Emaar said. It did not give a comparison with last year.
|
