Emaar's shares have further to climb, say analysts
Al Jazira Capital and Merrill Lynch both tip stock despite recent rise
Al Jazira Capital has raised its target price on Dubai's Emaar properties "on the back of heightened demand for for Emaar's projects" as well as a general improvement in property prices and its proposals to expand Dubai Mall.
A new report raises the company's recommendation stock from 'Neutral' to "Overweight'. The report states that the company, whose shares have already outperformed the Dubai Financial Market by doubling in value over the past 12 months, should have a 12-month price target of AED: 7.39 ($2.01). This represents an upside of around 75% on the AED: 5.92 ($1.61) at which the shares were trading when the research was published.
It pointed to recent research by Asteco showing annual price rises for apartments and villas in Dubai of 27% and 24% respectively.
"We believe, in light of the prolonged uncertainty in the region courtesy the Arab spring, Dubai will enjoy its position as a safe haven," it said.
The firm maintained its full-year profit target for the business of $731.6m (AED: 2,687m) on an anticipated 11% hike in revenues to $2.49bn (AED: 9,145), with the shortfall in profit being picked up as the year continues.
"Post 2013,we expect the Dubai Mall expansion to come into play, along with an improved outlook on property sales and prices with the upcoming projects in the pipeline."
Meanwhile, Merrill Lynch placed a Buy recommendation on Emaar's shares, citing four driving factors - continued strong retail growth, improving profitability from its hotels, the accelerating rate of project launches in Dubai and Saudi and a stronger balance sheet - as well as reduced exposure to non-yielding assets like Amlak.
It added that despite a 59% increase in its share price in the year-to-date, it was setting a price target of AED: 6.30 on the shares.
Within the past six months, Emaar has launched several new projects including the The Address The BLVD, Fountain Views and Burj Vista projects in the Downtown area near its Burj Khalifa tower, as well as the Mira project at its new Reem project near Arabian Ranches and a golf-themed development at Mohammed Bin Rashid City known as Golf Hills.