Emaar Properties PJSC (EMAAR) jumped the most since September as the developer of the world’s tallest skyscraper plans a $2.45 billion share sale of its shopping malls to reward stockholders.
The shares surged as much as 6.8 percent, the most since Sept. 10, to 9.25 dirhams, before trading at 9.12 dirhams as of 1:06 p.m. in Dubai. The estimated 8 billion dirhams ($2.2 billion) to 9 billion dirhams generated from the public offering will primarily be distributed to shareholders as dividend, Emaar said, without giving a time frame for the sale.
The developer last month got an investment grade rating for the first time in four years at Standard & Poor’s as Dubai’s property market rebounded amid an economic recovery. That and an upgrade of the United Arab Emirates to emerging-market status from frontier in June by MSCI Inc. has helped Dubai’s benchmark stock index more than double in the past 12 months.
Selling shares this year would be appropriate because of “the strong traded values, the recovery in the Dubai economy and the MSCI upgrade,” Sanyalaksna Manibhandu, manager of research at NBAD Securities, said by e-mail today. “I shall probably increase my target price.” Manibhandu has a buy rating with a price estimate of 10.50 dirhams on Emaar.
Dubai’s economy expanded about 4.9 percent in 2013, four years after it was rescued from near default with a $20 billion bailout from neighboring Abu Dhabi. Property prices are surging and companies including real-estate developer Nakheel PJSC are repaying debt early to win back investor confidence.
Emaar is benefiting from the tourism and retail boom that’s driving up visitor numbers at its malls and boosting sales. The retail business posted a 20 percent increase in revenue last year to 2.84 billion dirhams as the Dubai Mall received 75 million shoppers. The company is also set to get a further boost as the emirate prepares to host World Expo 2020, with about $8 billion in infrastructure spending planned.
The developer, which has the highest weighting on Dubai’s benchmark index, proposed a 2013 dividend of 15 fils and 10 percent bonus shares. That compares with 10 fils for 2012, according to data compiled by Bloomberg. Emaar reported a 21 percent surge in full-year profit to 2.57 billion dirhams.
“The market should respond favorably to the news in coming sessions,” Arqaam Capital Ltd. analysts Mohammad Kamal and Mohamad Haidar wrote in a note to investors, before shares started trading today. “We continue to regard Emaar as one of our top picks for 2014.”
The stock has surged more than 60 percent in the last 12 months, boosting Emaar’s market value to about 60 billion dirhams.
“Emaar’s shopping malls and retails subsidiary is our high-performing business, which derives its growth impetus from the sustained growth of Dubai,” Chairman Mohamed Alabbar said in a statement yesterday.
The developer is the most recent company in the region to take advantage of surging markets and asset prices to plan public offerings. Emirates Reit, U.A.E.-based real estate investment trust, will sell shares on Nasdaq Dubai (DPW) in the first IPO in the sheikhdom in at least five years, it said March 11. The company is seeking at least 500 million dirhams for acquisitions and investments.
Abu Dhabi’s Senaat, which owns companies including National Petroleum Construction Co., is seeking approval from the emirate for an IPO this year, two people familiar with the matter said last month. It hired HSBC Holdings Plc (HSBA) and JPMorgan Chase & Co. for a sale on the Abu Dhabi Securities Exchange.
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