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Dh3.50
Price
Dh2.86
Short term (0-60 days)
Q11 perform mance was largely in line with our ex xpectations, a although The 2Q Dubai Bank's Dh17 72m provision carries hea adline risk. Our constricti O ive view on Em maar's stock remains un nchanged as recurring revenue mo s omentum remain relatively robust and exceeded our expectations ns e s. Key fo orecasts
FY Y09A
Total property income (Dhm m) 8, ,413 1, ,510 2, ,028 0.05 53.30 0.00 0.00 4.70 4.70 39.20 9.09
n/a
Market view
No Weighting
FY10A
12,150 1,901 2,478 0.40 7.12 0.00 0.00 5.10 5.10 43.90 13.90
FY11F
8,546 1,996 2,244 0.33 8.56 0.00 0.00 5.33 5.33 46.40 12.30
FY12F
7,560 1,997 2,306 0.35 8.28 0.00 0.00 5.68 5.68 49.60 7.05
FY13F
5,673 2,002 2,287 0.34 8.36 0.00 0.00 6.02 6.02 52.50 1.64
ce Price performanc (1M) Price (Dh) Absolute (%) Rel market (%) Rel sector (%) Jul 09
12 10 8 6 4 2 0 EMAR.DU DFM General Ind dex
Net renta income (Dhm) al Normalise PTP (Dhm) ed (3M) 3.31 -13.6 -6.6 -15.5 (12M) 3.21 -10.9 -11.0 -24.8 Normalis sed EPS (Dh) Normalis sed PE (x) 3.03 -5.6 -4.0 -5.4 Dividend per share (Dh) Dividend yield (%) Adj NAV per share (Dh) NNNAV per share (Dh) p Disc/(prm to adj NAV (%) m) Net debt to tot ass (%) ng Accountin standard: IFRS Source: Company data, Kiza C ashi
Jul 1 10
Jul 11
Dh17.44bn ( 3.28bn)
Average (12M) daily turnove er
Dh50.93m (US$13.65m)
Sector: ADX Bank & Fin Index RIC: EMAR.DU, EM MAAR UH Priced Dh2.86 at close 27 Jul c 2011. Source: Bloo omberg
Solid 2 pro forma results 2Q Emaar reported 2Q11 revenue of Dh2, 032m (u 2.5% qoq a up and down 23.4 4% yoy), exceeding our forecast of Dh1, 925 and consen 5m nsus of Dh1, 9 971m. Net prof before fit the write-off related to Dubai Ban was Dh422 nk 2m (up 0.3% qoq and down 47.4% n yoy), e exceeding our f forecast of Dh3 397m. Although the gross ma argin was 220b below bp our expectation of 4 49.8%, the EP beat was m PS mainly due to higher-than-e expected revenue and SG&A e expense as a percentage of sales being 140bp lower t f than our forecas of 21%. The company also recognized impairment o Dh172m du st of uring the quarter as it complete wrote off it investment in its associate Dubai Bank. r ely ts e Recurr ring income p portfolio cont tinued to outp perform Althoug we expected a slight q gh qoq decline in Emaars recu urring revenue due to e seasonality in tourism it maintained its strong recurring income portfolio perf m, e formance, reportin revenue of roughly Dh8 ng f 833m, in line with 1Q11. However, reven H nue from propert for sale wa almost in line with our e ty as expectations, d driven by hand dovers of residen ntial units in Burj Khallifa and Umm Al Quw wain Marina an commercial space in nd l downto own Dubai. In t total, Emaar delivered about 244 units dur t ring the quarte vs 270 er, in 1Q11 and 612 in 2Q10. It expect to commenc handovers in its Jeddah ga and Al 1 ts ce n ate Khobar Lakes project in Saudi in 2H11. r ts Story r remains unch hanged We rem main constructi ive on the nam with a Buy r me rating and a Dh3.50 per shar target re price. We believe cu urrent price le evels offer an attractive en ntry point beca ause we expect the stock to m maintain its str rong recurring income portfolio performanc and to ce trade a a premium to its peers bac at o cked by relative better fund ely damentals. Valuat tion Using a SOTP appro an oach, we value the recurring income portfolio at Dh2.64 p share per (75% o TP), projects for sale at Dh of s h0.82 (24% of TP) and other assets at Dh0 f r 0.04 (1% of TP).
Income statement
Particulars (Dhm) Net rental income Prop development income Other revenue Total property income Other costs EBITDA DDA & Impairment (ex gw) EBITA Goodwill (amort/impaired) EBIT Associates (pre-tax) Net interest Other pre-tax items Reported PTP Taxation Minority interests Other post-tax items Reported net profit Dividends declared Tot normalised items Normalised EBITDA Normalised PTP Normalised net profit Source: Company data, Kizashi forecasts
FY09A
1510 6236 667.2 8413 -5358 3056 -635.7 2420 0.00 2420 -534.5 139.0 3.35 2028 23.5 37.9 -1762 327.3 0.00 0.00 3056 2028 327.3
FY10A
1901 9270 979.6 12150 -8715 3436 -804.6 2631 0.00 2631 -430.5 -90.0 367.8 2478 -1.44 -28.8 0.00 2448 0.00 0.00 3436 2478 2448
FY11F
1996 5327 1222 8546 -5429 3117 -724.6 2392 0.00 2392 -367.4 -50.1 268.9 2244 -6.74 -200.5 0.00 2037 0.00 0.00 3117 2244 2037
FY12F
1997 4352 1211 7560 -4735 2825 -700.3 2125 0.00 2125 -250.0 86.3 344.7 2306 0.00 -200.5 0.00 2106 0.00 0.00 2825 2306 2106
FY13F
2002 2453 1218 5673 -3255 2418 -671.4 1747 0.00 1747 -90.0 260.6 369.3 2287 0.00 -200.5 0.00 2086 0.00 0.00 2418 2287 2086 Year till Dec
Balance sheet
Particulars (Dhm) Cash & market secs (1) Props under dev Other current assets Investment prop Other non-current assets Total assets Short term debt (2) Long term debt (3) Other liabilities Total liabilities Total equity (incl min) Total liab & sh equity Net debt Source: Company data, Kizashi forecasts
FY09A 2797 31076 1388 8546 20338 64145 4500 4125 26641 35266 28879 64145 5828
FY10A 2468 26492 4170 8110 21264 62504 4455 6714 21794 31204 31300 62504 8701
FY11F 2299 25171 5061 7905 20452 60888 5003 4796 19915 27953 32935 60888 7500
FY12F 2655 23820 4981 7594 19713 58763 2503 4296 18484 23522 35241 58763 4144
Particulars (Dhm) EBITDA Change in working capital Net interest (pd) / rec Taxes paid Other oper cash items Cash flow from ops (1) Capex (2) Disposals/(acquisitions) Other investing cash flow Cash flow from invest (3) Incr / (decr) in equity Incr / (decr) in debt Ordinary dividend paid Preferred dividends (4) Other financing cash flow Cash flow from fin (5) Forex & disc ops (6) Inc/(decr) cash (1+3+5+6) Equity FCF (1+2+4) Source: Company data, Kizashi forecasts
FY09A 3056 -5012 0.00 -3.00 327.4 -1632 -1866 6.42 -930.7 -2790 0.00 1196 -3.57 0.00 17.2 1210 -102.2 -3315 -3498
FY10A 3436 -3320 90.0 3.13 255.7 464.3 -778.8 606.5 -2626 -2798 0.00 816.5 -1.21 0.00 1444 2259 -11.9 -86.7 -314.5
FY11F 3117 -954.2 50.1 0.64 219.9 2433 -172.2 21.3 -578.5 -729.4 0.00 -3194 -0.08 0.00 1376 -1817 -9.30 -122.8 2261
FY12F 2825 199.5 -86.3 0.00 431.0 3370 -100.0 0.00 371.4 271.4 0.00 -3000 0.00 0.00 -285.1 -3285 0.00 355.9 3270
FY13F 2418 127.1 -260.6 0.00 629.9 2915 0.00 0.00 417.6 417.6 0.00 -1200 0.00 0.00 -157.0 -1357 0.00 1975 2915 Year till Dec
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