Dar Al Arkan Surges After Developer’s Debt Pledge: Riyadh Mover

Dar Al Arkan Real Estate Development Co. rose to the highest in more than a year, leading gains on Saudi Arabia’s benchmark, after the property developer said it’s on track to meet debt payments.

Shares of the Riyadh-based company surged 6.4 percent to 10 riyals, the highest since January 2011, at the 3:30 p.m. close in the Saudi capital. The stock was the most-heavily traded by volume on the Bloomberg GCC 200 Index and the third-biggest gainer in Saudi Arabia. Dar Al Arkan’s shares, which have advanced 38 percent in 2012, trade at a price-to- earnings ratio of 9.9 times compared with 15.4 times for the country’s benchmark.

Saudi Arabia’s second-biggest property company by market value said on Feb. 29 it “categorically” denied speculation it “is facing any sort of crisis.” The comments came after a website said it had “prepared an archive of information and evidence which details a series of fraudulent actions, regulatory breaches and corporate malpractice.”

A rally in Dar Al Arkan’s stock is “expected after the company replied to the rumors,” said Abdullah Al-Saif, senior trader of fixed income and equity at Saudi Hollandi Capital in Riyadh. The stock fell in the last four years, including a 19 percent slump in 2011.

Repaying Debt

Dar Al Arkan plans to repay about 5 billion riyals ($1.3 billion) this year as it sells land to build cash holdings, Chief Financial Officer Andy Raheja said in an interview on Feb 15. The company’s fourth-quarter profit beat analyst estimates even after dropping 12 percent to 289.6 million riyals because of lower land and apartment sales.

“Our business is robust and we are on track to repay all debts as they come due including the upcoming sukuk in July,” Dar Al Arkan said.

Saudi Arabia announced plans last year to invest $130 billion in social and housing projects as the largest Arab economy seeks to meet the growing real estate demands of its 28 million people.

The developer has 6.2 billion riyals of bonds due through to the end of 2015, according to data compiled by Bloomberg. This includes a $1 billion Islamic bond due in July.

Ten analysts recommend investors buy shares, while five have a hold rating on the stock, according to data compiled by Bloomberg. One analyst recommends investors sell.

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