Emaar Rallies on New Project, Bigger Dividend Bets: Dubai Mover

Emaar Properties PJSC rose to the highest level in more than three years after the developer of the world’s tallest skyscraper started a residential project in Dubai and on bets the company will pay a higher annual dividend.

The shares climbed 4.1 percent to 4.3 dirhams, the highest close since November 2009. Emaar, which has the heaviest weighting on Dubai’s index, helped boost the DFM General Index up 1 percent to 1,791.73, the strongest level since April 2010. The company’s 14-day relative strength index climbed seven basis points to 76 today. A level of 70 indicates to some analysts that a security is poised to decline.

Emaar said yesterday it started developing the Address Residence Fountain Views in Dubai, comprising 280 apartments. Positive trends in the property sector are set to continue in 2013, Shuaa Capital PSC said in a note today, raising Emaar’s price estimate 23 percent to 4.94 dirhams. The company paid cash dividends of 10 fils in each of the last two years.

“Investors expect the company to pay 15 fils to 20 fils in dividend,” said Samer al-Jaouni, general manager of Middle East Financial Brokerage Co in Dubai. The new project is also “positive,” he said.

Calls to Emaar’s external communications company to discuss the dividend proposal weren’t answered today.

Amlak Restructuring

Dubai’s property market is recovering amid a broader pick up in the economy, which probably expanded 5 percent in 2012, the fastest pace since 2007, according to government forecasts. Tourism, hotel and restaurant industries grew 16 percent in the first half, official data show. Emaar’s 2012 profit probably grew 15 percent, according to the average estimate of 11 analysts compiled by Bloomberg.

Optimism that the developer’s 48 percent-owned mortgage finance affiliate, Amlak Finance PJSC, would restructure $2 billion of debt also supported Emaar’s stock. The process will probably be completed by the second quarter, the United Arab Emirates economy minister said last week.

“The recent movement to resolve the long-standing issue with Amlak is also reflecting positively on” Emaar shares, al-Jaouni said. Dubai-based Amlak is negotiating with a committee of five banks representing creditors, two bankers familiar with the matter said Jan. 15.

Twelve analysts recommend investors buy Emaar’s shares while three have a hold rating on the stock.

Before it's here, it's on the Bloomberg Terminal.