Air Arabia Gains Most Since January on Tourism Boom: Dubai MoverSherine El Madany
Air Arabia PJSC climbed the most in three months on optimism the airline would post bigger earnings as the nation’s tourism industry continues to grow.
The stock rose for a second day, adding 3.7 percent, the biggest single-day gain since Jan. 2, to 79 fils at the close in Dubai. Air Arabia was the third-most traded stock by volume on the benchmark DFM General Index, which increased 0.6 percent to 1,854.01 points.
Passenger traffic through the United Arab Emirates has risen as the nation’s economy picks up and airlines based in the country add new destinations. Air Arabia, the Middle East’s biggest no-frills airline, last year started flights to nine additional stops including destinations in Iraq and Russia from its hub in the U.A.E emirate of Sharjah.
“The business model remains solid,” said Tariq Qaqish, deputy head of asset management at Dubai-based Al Mal Capital PSC. “The company continues to achieve strong results supported by the robust tourism sector in the U.A.E.”
The carrier in 2012 flew 13 percent more passengers, a record 5.3 million, helping boost profit by 56 percent, it said last month. Goldman Sachs Group Inc. raised its price estimate for the airline in February and increased its 2013 profit estimate by 5 percent.
Dubai, owner of the world’s biggest airline by international traffic, expects the economy to expand at a “relatively high rate” in 2013, driven by a tourism boom, Sami Al Qamzi, director general of Dubai Department of Economic Development, said in March.
Passenger traffic through the emirate’s airport rose 13 percent in 2012 to 57.7 million, making it the world’s third-busiest, according to Dubai Airports.
Air Arabia’s 2013 net income may increase 14 percent, according to the mean estimate of seven analysts compiled by Bloomberg. “We believe Q1 numbers will easily beat Q1 2012,” Al Mal’s Qaqish said. Net income in the first quarter 2012 rose 12 percent to 47.7 million dirhams.
Five analysts recommend investors buy the shares, while six have a hold rating on the stock and one advises selling it, according to data compiled by Bloomberg.