Troubled Aldar shares slip to lowest level ever

Property firm stock slides since asset and bond sale to government

Analysts have become more bearish on the company.
Analysts have become more bearish on the company.

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Aldar Properties fell to its lowest level in the company’s listed history as stock pickers continue to retreat since the company’s sale of assets and bonds to the government.

Abu Dhabi’s biggest property developer sank another 2.73% to close at AED 1.78 per share having fallen for much of the last two weeks since closing at AED 2.45 on 9th January. Ahmed Badr at Credit Suisse cut his recommendation from ‘neutral’ to ‘underperform’ and reduced his share-price estimate.

The slide coincides with the company’s attempts to manage its debts and claw back revenues following a steep decline in the property market in the UAE in the last two years. Two weeks ago the government injected AED 10.9 billion into the company through the purchase of Ferrari World, Aldar’s car-themed amusement park opened in November, as well as the related infrastructure. The developer also sold around AED 5.5 billion in land and housing to the government, which is the main backer to the company.

Mubadala Developmebnt Company, a state-backed investment company, agreed to buy an AED 2.8 billion convertible bond from the company. More than 303 million shares have been transferred to Mubadala as a result of converting AED 3.5 billion in zero-coupon convertible bonds in shares on 16th January at the agreed conversion rate of AED 11.73, according to the developer’s accountant, Deloitte & Touche.

Aldar’s share capital is now AED 2.88 billion.

The developer posted its biggest net loss for one quarter between July and September of AED 731.2 million against a net profit of just over AED270 million for the same period in 2009. This included an AED1.52 billion loss for the first nine months of 2010, against an AED1.4 billion gain last year. Measuring the company’s assets by ‘fair value’ – or mark to market – accounting was part of the reason for the loss, according to the company.

Credit Suisse’s Badr cut the share price estimate to AED 1.59 from AED 2.28, though remained neutral on Sorough Real Estate and Saudi Arabia’s Dar Alarkan Real Estate Development.

Chet Riley at Nomura recommended a neutral position on Aldar two days ago. Jad Abbas at EFG Hermes recommended a ‘sell’ having maintained a ‘buy’ rating on Dubai rival Emaar Properties and neutral on Union Properties. Of 13 analysts, five analysts each recommend buy and sell, with three advising a hold on the stock.

In the last day of the week trading in Saudi Arabia, Makkah Construction & Development Company rose 0.96% to SAR 31.5. Dar Al Arkan fell 0.49% to SAR 10 per share, as the real estate and construction indices on the Tadawul fell 0.17% and 0.43% respectively.

In Doha, Mazaya Real Estate fell 5.5% to close at QR 9.35 following a 4% in net profit for 2010 against 2009, according to a draft of the company’s finances published yesterday.

United Development Company fell 0.3% to QR 28.3 to continue its slide for the week despite posting an 18% rise in net profits for 2010 against the previous year through a rise in sales. Ezdan Real Estate fell more than 5.3% to QR 24.8.

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