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Emaar Drops Most in 2 Weeks as Net Misses Estimate: Dubai Mover

Oct. 24 (Bloomberg) -- Emaar Properties PJSC fell the most in more than two weeks after the developer of the world’s tallest skyscraper said third-quarter net income missed estimates as revenue declined.

The shares of the stock with the heaviest weighting on Dubai’s gauge retreated 1.9 percent, the most since Oct. 8, to 3.68 dirhams at the close in the emirate. The stock pushed Dubai’s benchmark DFM General Index down 0.5 percent to 1,641.34 and was the most active in the gauge today with 20.11 million shares traded, or 181 percent of the three-month average daily volume.

Net income fell 5 percent to 387 million dirhams ($105 million), missing the 476-million dirham mean estimate of six analysts surveyed by Bloomberg. Revenue declined 12 percent to 1.64 billion dirhams.

“The stock fell on disappointment in earnings, which came below expectations as the company attributed the drop to seasonality,” said Nabil Farhat, a partner at Abu Dhabi-based Al Fajer Securities. “Emaar’s strategy is still focused on increasing recurring revenues through its investment portfolio including malls and hotels and capitalizing on economic growth in the United Arab Emirates and abroad.”

Emaar is seeking to diversify revenue from its home market with plans to expand in Egypt and Iraq. The company, which also operates in China, India, Pakistan and Syria, derived 18 percent of sales from outside of the U.A.E. last year, up from 8 percent the year earlier, according to data compiled by Bloomberg. Emaar’s revenue from hotels and malls has helped cushion the effect of the region’s real estate slowdown.

Rents Rising

Dubai, the second-largest of seven sheikdoms that make up the U.A.E., relies on foreign trade, tourism and property for growth. The emirate is seeing a recovery in the real-estate market, according to Mohammed Al Shaibani, director general of the emirate’s ruler’s court. Sub-market home rental rates are on an “upward curve” in Dubai, CBRE Group Inc said in a report this month. Economic growth in the emirate, which was on the brink of default in 2009, will accelerate to 5 percent this year from 3 percent in 2011, according to government forecasts.

Emaar shares have rallied 43 percent in 2012 and were the best-performing on Dubai’s benchmark stock index in the third quarter. The surge outpaces a gain of 21 percent for the DFM General Index this year.

Thirteen analysts recommend investors buy the shares of Emaar while three have a hold rating on the stock, according to data compiled by Bloomberg.

To contact the reporter on this story: Zahra Hankir in Dubai at zhankir@bloomberg.net

To contact the editor responsible for this story: Alaa Shahine at asalha@bloomberg.net

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