Tuesday, January 02, 2007

Emaar Properties expects 35 percent increase in annual profits

Analysts are of the opinion that Emaar Properties is likely to witness a thirty five percent increase in its annual profits during the coming year. The Analysts of Shuaa Capital have mentioned that Emaar will witness a net profit of Dh.1.73billion during the fourth quarter of 2006, which is actually a 66 percent increased over the same period during 2005. The total profit of the initial nine months during 2006 was Dh.6.54bn, due to which the average profit of the entire year is estimated at 6.38bn. Investors are under fear that after the unstable growth witnessed during 2005, the Emaar shares will be knocked down in the stock markets once more in case it announces a measly earnings growth in the coming year.

Due to the high pace in the past, the expectations placed on Emaar are always higher in comparison to other companies. According to EFG Hermes, an investment bank, this means that though the company does well on an international scale and even if its profit is very high, anything unstable that it does, will fall below expectations. Hermes comments that the Burj Dubai construction by Emaar has reached the benchmark of twenty percent and hence Emaar can begin to recognize its associated revenues. On recognition, a net profit by approximately Dh.0.6bn is estimated in addition to the distinct improvement in the operating margins.

EFG states that the smaller margin of net profit by Emaar during the third quarter of 2006 was expected due to the higher revenue made from property sales at the cost of raw land sales, which is a healthy trend that allows the company to get more value-add from developments.

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