Thursday, 11 February 2010
Emaar sells Singapore stake as $1bn debt repayments loom (Re-post)
Dubai’s leading real estate developer Emaar Properties is to sell its $164 million stake in Singapore retailer RSH, according to a report from Reuters.
Last September the group reported a total debt of $2.2 billion with around 50 per cent due this year. Third quarter profits totaled $178 million, and full year figures for 2009 are now awaited.
In the black?
HC Securities estimates Emaar’s full year profit will come in at $11.7 million compared with a previously estimated loss of $76.6 million. Indeed, the broker has a price target that has Emaar’s share price doubling.
However, the bigger picture for Emaar shareholders has to be the general market sentiment in the UAE, even if Emaar is the largest company by market capitalization on the Dubai Financial Market.
At the moment investor sentiment is depressed by the poor outlook for business in the UAE for 2009 with officials recently conceding that economic growth would be at best very modest in the year. The real estate sector in particular is dampening growth prospects from other areas of the economy like oil and trade.
According to HC Securities, Emaar likely delivered 3,900 units last year and will complete 4,500 this year, a drop on an earlier estimate of 4,800 units. Emaar is also enjoying a strong rental income from the Dubai Mall which is 95 per cent occupied and increased visitor numbers since the opening of the Burj Khalifa.
Write-offs
Emaar has written off some of its horror stories, like the $1 billion lost on Laing Homes in the USA but it does have an estimated $326 million exposure to Amlak Finance, the Islamic mortgage company whose shares are suspended pending a proposed merger with rival Tamweel.
However, it is hard not to see Emaar as the big survivor of the Dubai real estate crash and a possible long-term beneficiary as indebted rivals implode and their assets are sold off. But that is still an ongoing process and in the meantime the market will not like the uncertainty it proscribes and will discount share prices appropriately.
So although Emaar appears to be acting prudently in selling its non-core stake in this Singapore retailer, the group will probably be very glad of the cash and the Dubai real estate downturn is not fully over just yet.
IEA: 2010 World Oil Demand Seen More Robust
The International Energy Agency said Thursday it expects consumers globally, and led by China, to burn more crude oil this year than previously forecast as the economic recovery deepens.
The Paris-based agency forecast world oil demand to average 86.5 million barrels a day, representing an upward revision of 170,000 from its January report and growth of 1.8% from 2009. All of the annual increase in consumption comes from emerging markets.
Adding to the IEA report's bullish tone, the agency said the amount of unused oil packed away in storage caverns and offshore tankers continued to fall in January on incremental demand and as big producing states like Saudi Arabia keep existing production cuts in place.
But the IEA's forecast is decidedly more optimistic than most other forecasters. Its 2010 world oil demand projection is a hefty 1.2 million-1.4 million barrels a day higher than what the U.S.' main energy data agency and the Organization of Petroleum Exporting Countries are expecting this year.
The IEA is an energy adviser to mostly wealthy nations, including the U.S., and analysts say one of its roles is to talk up the need for oil markets to have plenty of crude available.
Conversely, OPEC is often more conservative on its demand forecasts, which analysts say helps the oil cartel justify keeping a tighter leash on its output to support oil prices.
The IEA bases its demand outlook on economic forecasts from the International Monetary Fund, which said recently it expects world economic growth this year to be 3.8%, up almost 1 percentage point from its autumn forecast. The IEA cautioned that its demand forecast could turn out 400,000 barrels a day lower if economic activity isn't as robust as expected.
"We are aware of the economic uncertainty...but we think there is significant growth potential in Asia, the Middle East and other [emerging] countries," said David Fyfe, editor of the IEA monthly oil market report.
Oil prices Thursday traded up about 25 cents at $74.80 in New York at 0920 GMT. Prices have tarried mostly between $70 and $80 a barrel in recent months amid somewhat conflicting economic signs.
China and other Asian states are growing strongly but many economists think the sustainability and strength of recovery in developed nations like the U.S. could be upended once governments start tightening lax fiscal and monetary programs.
Relatively weak credit growth and high consumer indebtedness have also raised questions about the health of private sector demand, which will be required for any sustainable recovery.
In its report, the IEA forecast Chinese crude demand this year to hit 8.9 million barrels a day, up 400,000 barrels a day from 2009 and 75,000 barrels a day higher than the IEA's January forecast.
Oil demand in the U.S., the world's biggest oil consumer with China a distant second, is expected to come in at 18.78 million barrels a day, about the same as 2009 and about 2 million barrels a day lower than 2007. That reflects not only weaker U.S. economic growth and industrial activity but greater energy-efficiency efforts.END
Dubai Shares Gain Most in World as Banks Post Quarterly Profit
Dubai stocks climbed to the highest in three weeks after fourth-quarter earnings at the sheikhdom’s largest banks, Emirates NBD PJSC and Dubai Islamic Bank PJSC, surged. Qatar shares gained the most this year.
Emirates NBD jumped after quarterly profit soared more than 10-fold and Dubai Islamic Bank surged 5.2 percent. That pushed the DFM General Index up 2.2 percent, the biggest increase since Jan. 20 and the biggest gain among global benchmark indexes tracked by Bloomberg. The measure advanced 0.8 percent this week, closing at 1,676.2. Qatar’s Doha Securities Market Index rose 1.6 percent, the most since Dec. 14, as the prime minister said the budget for the next fiscal year will be “much larger” and the nation “stands by” its publicly listed companies.
The earnings are “an indication that the banking sector has reached a bottom both in terms of provisioning and operating profit, so the outlook now looks a lot healthier,” said Rabih Sultani, a fund manager at Duet Mena Ltd., a unit of Duet Group, which oversees $2.1 billion.
Emaar Posts Fourth-Quarter Profit, Beats Estimates
Emaar Properties PJSC, the builder of the world’s tallest skyscraper in Dubai, reported a fourth- quarter profit of 720 million dirhams ($196 million), beating estimates as revenue from its malls and hotels grew.
The loss in the year-earlier period was 2.43 billion dirhams, Emaar said in a statement to the Dubai bourse today. Analysts predicted a profit of 714 million dirhams, according to the mean of four estimates compiled by Bloomberg.
The developer, which opened the 200-story Burj Khalifa in January, is focusing on overseas operations after property prices in its home market fell by more than 50 percent. Indian joint venture Emaar MGF Land Ltd. plans to raise 38.5 billion rupees ($800 million) in an initial share offering, Emaar Chairman Mohammed Alabbar said in November.
Kuwait's KIPCO placed on creditWatch negative on upcoming review
Standard & Poor's Ratings Services said that it had placed its 'BBB+' long-term and 'A-2' short-term corporate credit ratings on Kuwait-based operating holding company Kuwait Projects Co. (Holding) KSC (KIPCO) on CreditWatch with negative implications.
The CreditWatch placement reflects our view on KIPCO's portfolio characteristics, which we believe have weakened, and which may have negative implications on our assessment of the company's stand-alone credit profile (SACP) in an upcoming review.
The placement also reflects a possible revision of our view on what we currently see as a 'moderate' likelihood of extraordinary support from its majority owners, currently factored into the ratings.
Emirates NBD profits fall surprises on upside
Dubai-based Emirates NBD, the Middle East’s largest bank by assets, on Thursday announced full-year net profits of Dh3.3bn ($898m), down 9 per cent on 2008, despite a doubling in bad debt charges and financial trouble at one of its real estate investments.
The bank’s non-performing loans ratio, the focus of analysts’ attention, grew “in line with expectations” to 2.36 per cent from 1.88 per cent in the fourth quarter of 2009 and 0.95 per cent reported in 2008. Most analysts think that Dubai property prices have fallen by at least 50 per cent since their peak in 2008.
Ratings agencies such as Fitch have said they are concerned about the impact of deteriorating asset quality on profitability, with Abu Dhabi Commercial Bank, another sizeable UAE bank, having announced a loss in 2009. The agencies also say that the full impact of Dubai World’s $22bn debt restructuring on UAE banks is unlikely to reveal itself until after a standstill agreement is formalised.
DP World Discussed Australian Asset IPO With Banks, Review Says
DP World Ltd. has held talks with JP Morgan Chase & Co. and Deutsche Bank AG about a possible A$1 billion ($876 million) listing of its Australian ports, the Australian Financial Review reported in its Street Talk column.
No final decision has been made and Dubai-based DP World would keep a substantial stake in the operations if a local listing went ahead, the newspaper reported, without saying where it got the information.END
Original post here
Emirates NBD Profit Falls 9% as Impairments Double
Emirates NBD PJSC more than doubled provisions for bad loans to 3.63 billion dirhams ($988 million) as the biggest bank in the United Arab Emirates posted a 9 percent drop in full-year profit.
Net income fell to 3.35 billion dirhams from 3.68 billion dirhams a year earlier, the state-controlled bank said in a statement today. That missed the mean estimate of 3.52 billion dirhams of seven analysts surveyed by Bloomberg. Fourth-quarter profit surged to 178 million dirhams from 15 million dirhams in the year-earlier period.
The increase in delinquencies and non-performing loans is “broadly within expected levels,” the Dubai-based bank said. It was driven by higher “specific impairments across retail and corporate portfolios” and the addition of 1.29 billion dirhams to “portfolio impairment provisions as a measure of prudence in the current environment, partly offset by lower impairments on investment and trading securities.”
EGYPT: Saudi prince's land deal infuriates lawmakers
Details of a previously undisclosed 12-year-old contract that enabled Saudi Arabian billionaire Prince Waleed bin Talal to buy nearly 104,000 acres in Egypt's western desert have spread anger and dissent among independent and opposition lawmakers.
Contents of the 1998 contract signed between Talal's Kingdom Holding Co. and the Egyptian General Authority for Rehabilitation Projects and Agricultural Development (GARPAD) were published by the Al Masry Al Youm daily newspaper on Wednesday, alongside a photocopy of the original document.
The newspaper reported that the Saudi tycoon paid the bargain price of about 50 Egyptian pounds ($9.10) per acre and was guaranteed low fees for unlimited access to water and electricity on the sprawling piece of land. The real estate is part of the Egyptian government's New Valley project, which started in 1997 with the aim of reclaiming half a million acres of desert.
Dubai Commodities Agency Seeks To Rise Above Regional Woes
A budding commodities trading house in Dubai is seeking to escape the fallout from debt woes plaguing the region.
The Dubai Multi Commodities Center, or DMCC, has ridden on Dubai World's coattails to build its own trading operations. This association turned sour, however, when the investment company for Dubai's government last November sought to delay payment of $26 billion of debt, rocking markets around the world.
DMCC is now distancing itself from Dubai World, emphasizing its separate royal charter and balance sheet.
Gulf offers few defensive stock options
As banks in the United Arab Emirates and elsewhere in the region enter their reporting season, many expect profits to be hit by higher non-performing loans and write-downs of assets based on falling land values.
But the options for investors seeking to avoid this sector are limited, according to analysts.
Typically, in developed markets, they might identify defensive stocks that are less correlated to the economic cycle. Telecommunications and utilities, for example, are usually thought to deliver consistent earnings because people still make telephone calls and use about the same amount of power in good times as in bad.
Comment: Impaired loans plague UAE banks
Bank liquidity in the United Arab Emirates tightened significantly in late 2008 and into 2009 as the global economic crisis began to bite. The slowdown exacerbated a tightening that had been set in train earlier as speculative capital inflows went into reverse.
Over the past year, matters have improved but the liquidity problem has not disappeared totally. The gap between loans and deposits fell to $10bn at the end of last year but, at about 2 per cent, three-month interbank rates remain relatively high.
For many banks, loan/deposit ratios remain substantially above 100 per cent, access to international capital markets remains limited and expensive, and there is no sign of foreign depositors returning. While the ratio of advances to stable resources across the system as a whole – the main focus of UAE central bank attention – has fallen below 100 per cent, lending growth is nonetheless likely to remain weak this year.
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