Aabar Al Mal Buy rating

[sharewadi]

Khaleej Times 07 August 2009:

Al Mal Capital Keeps ‘Buy’ Rating on Aabar Investments DUBAI — Al Mal Capital kept its ‘outperform’ rating on Abu Dhabi-based investment fund Aabar Investments, (AABAR) saying the company is reaping gains from recent investments. “Aabar has enjoyed significant unrealised market gains on its investments in the listed equities of Daimler and Atlantia,” said Bobby Sarkar, equity research analyst at Al Mal Capital. In March, Aabar bought a 9.1 per cent share of Germany’s Daimler AG, maker of Mercedes-Benz cars. It snapped up a 4 per cent stake in electric-car producer Tesla Motors in late July. On July 28, Aabar added to its string of high-profile acquisitions, its purchase of a a 32 per cent chunk of Virgin Galactic Ltd., a unit of Richard Branson’s Virgin Group that plans to send tourists on expensive joy-rides into space. Aabar Investments has agreed to invest $280 million in Virgin Galactic to help develop sub-orbital spacecraft for the world’s first commercial ‘spaceline.’ The deal gave Aabar exclusive rights to host Virgin Galactic tourism and scientific space flights and would also build a spaceport in Abu Dhabi. Much earlier in January, Aabar acquired UniCredit’s stake in Atlantia — an Italian holding company for Dh1.4 billion. Al Mal Capital said Aabar will also continue to be strongly supported by the International Petroleum Investment Company (IPIC), which is wholly owned by the government of Abu Dhabi. IPIC earlier this year, granted Aabar a Dh1.5 billion interest-free and unsecured loan to help fund the Daimler purchase.

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[ando999]

Hello,

I've just found this forum and I've specifically being looking for a post like yours.

I'm a private/amateur investor and I'm interested in Virgin companies for various reasons. I'm especially interested in Virgin Galactic and thought it would be good to invest in an emerging industry like this, especially if it's through a Virgin company.

Aabar has now given me this opportunity. I've been looking through the annual reports for the last 3 or 4 years but can't really see where their investments lie. Before investing in Aabar, I would like to see what percentage of their portfolio Virgin Galactic is and what other companies/sectors they have in their portfolio.

So my question is, is there somewhere where I can obtain this information (preferably for free!)?

Thanks,

Andy

[sharewadi]

Hello ando and welcome to the losing-my-virginity Aabar stock forum .

Here's some (AABAR) information with latest news and some background, athough I haven't kept up with all their recent investments. The Al Mal report should have some good background - they usually make them accessible on their website for free if I remember correctly. I can't think of any other broker reports about Aabar that are freely accessible. Aabar's own website might have some details of their investments.

Aabar sold all their gas/oil assets last year, since then have bought into Abu Dhabi land, a bank (in Austria?), and a car company (Jaguar? No wait, Tata bought them right? Daimler?).
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[Foreigner]

See these two posts:

http://www.dubaisharetalk.com/viewtopic.php?t=10065
http://www.dubaisharetalk.com/viewtopic.php?t=10066

Basically, the bulk of the company is invested in Daimler and Atlantia, with $300m or so in Virgin Galactic and $500m or so in other bits and bobs. To obtain exposure to Virgin Galactic, you could possibly short Daimler and Atlantia while buying Aabar shares. The Al Mal report also contains a breakdown of their various assets, I'll mail it over to sharewadi.

[ando999]

Hi sharewadi/Foreigner,

Thanks very much for your response/advice I very much appreciate it!

Foreigner, I would be very interested in the Al Mal report if that's possible. Is it possible for you to send it to me through the forum or would I need to send you an email address?

Thanks again.

Andy

[sam111sam]

[Sanity]

Today, September 16 09, Mercedes Daimler shares continue to climb in European ( up 3 % reaching the peak of hedging coverage range of 34.4 Euros). DAI.DE (xtra)

If the Daimler shares were to remain the same price level or gain more by Septermber 30 2009, there is a minimum of AED 5 billion unrealized gain, or AED 1,5 per share of comprehensive profit (but unrealized).

If the shares were to fall down from the now Euros 34 plus / share to even Euros 25, let say (Q2 09) , ironically Aabar will get to book a gain of AED 4 billion in hedging income. The mass investors may take the worst news with more joy, since the hedging gain is booked as top line net income.

Any ways, AED 1.2 / shares of book profit seems locked in by Aabar in its next Q3 09 financial statements. Just need some patience. A rare chance to get in when the financial statement is misunderstood.

Easy pick

[sam111sam]

[maq3012]

Dear All,

Is there any fresh updates on Aabar, i purchase last month, the price is still same. Will there be a surprice result in Q3?

[Sanity]

The Answer for Q 3 09 has been defacto known to us all as of Sept 30 09. Aabar made another AED 5 billion from USD 13 x 100 million x 3.65 from Mercedez shares (based on market closing price). However, when the financial is released later this month or early November, it really depends on the Media whether they want to distort the results from positiv to AED 5 billion to negative..(by reading only the top line hedging and costs) instead the net gain of AED 4 billion more.

We hope the company can say it more clearly this time.

Otherwise, it will be value investing for us. The assets value is implicitly discounted by the market by 40% - 50%.

Not bad to hold on, if you are not a day trader.

Good Luck.

[sam111sam]

[joypsam1]

[zayda]

To all the Aabar investors, I would say dont be too overjoyed.
Even though I am not very good at hedge accounting which was very clever by Aabar to save its investments, the gain/loss in prices of DAI will not have any impact on profit of Aabar. The reason is due to classification, the investments are classified in Available for Sale, where any gain/loss is routed to equity and not to income.
So dont be surprised if Aabar declares a loss for 3Q as well.

[sam111sam]

[Sanity]

to Mr or Ms. Z : Hypothetically- If you had a private holding company, which has spent AED 8 billion to by Emaar and Aldar shares. You paid AED 1 or 2 billion for insurance and financing cost, and now your portfolio is worth AED 20 billion. Do you asked your accountant whether you made a loss or profit, if he tells you you must put the cost side on income statement and mark to market gain on the equity side ?

If you indeed had asked him, I think your law and accountand would probably think you are the most lucky guy or lady on earth, given the naive question you have asked and the pretty situation you are in.

I think if AAbar shares dont go up by 30-50% by year end, there must be some other reason beyond our normal understanding, we should either dump it or keep the shares forever. It looks like someone one wants your shares for cheap by misinformation and occassion small amount of share dumping

Hope nothing cynical like that is in the works...and we will all be happy to see it go to AED 5 / share.

[joypsam1]

[maq3012]

DAI shares were 7% up yesterday, closed above 37 Euro. Hope Aabar will pick from here.

[maq3012]

Just to calculate roughly Aabar Q3 profits based only on Aabar holding in DAI shares is as follows:

No of shares hold by Aabar in DAI: 96,408,000
* Gain on DAI (30-06-09 to 30-09-09): * 8 euros (approximate)
i.e: " 25.78 (-) 34.40"= 8.62 = 771,264,000euros @ 5.5=AED 4.2 bn

Since the DAI shares are classifed in Available for sale the gain will be in balance sheet not in income statement. I dont know the above calculation is justified to get the approximate figure? Any correction and comments are welcome

[joypsam1]

[fayesloan]

Why would the stock price of DAI be a driver of AABAR stock price now?
I think AABAR gave a few stock holders a good slap in the face with the announcement of a portfolion hedge (on Daimler price movement.) Only God knows what other hedging strategies they have in place with their other investments.
By all means I would love to hear otherwise, but I think it's virtually impossible to forecast what AABAR will make quarterly, or annually. This is one of the riskiest stocks to own on ADX, by the way. This does not mean I am saying it is a bad stock. It is just saying that holding this stock is risky because of the company's significant exposure to equity markets.

[sam111sam]

[Sanity]

The real beaf is by far in Aabar. Which stock has a built in cushion of AED 10 billion of profit, marked to market (in a dominant player in the world automotic / technology industry), enough for many mid to large company yet to earn in the next 10 to 20 years. The stock is traded heavily in german (DAI.DE) with Euros .5 to 1 billion of turnover value. It would take a good several weeks only to orderly liquidate Euros 4-5 billion worth of shares, if Aabar really wanted to do so. But the strategic value is even greater - why not wait until it goes back to Euros 70 / shares.

Ironically, investors seems even willing to accept development revaluation as component of income (that magical PE word everyone seems to be fascinated with), but not able count market established portfolio value in the equity account ? Bad analysis and news reporting are to be blamed, not the company.

It is just a matter of time before the value becomes crystal clear. May be even a dividend in the mail in 2010.

Be patient. Hauling in the big tuna is far better than the small daily frys.

[maq3012]

With support from IPIC by purchasing Aabar shares at AED 3 per share is itself a major boost to Aabar share price and the balance sheet . Aabar has done some smart investments at a critical time in the bearish market which had been quite positive for them. If IPIC has to gain from Aabar then Aabar market price has to be above AED 3. I feel buying at these level is quite safe, the chances of losing could be 20% from here and gain could be more than 100%.

[joypsam1]

You are right. But for long term only.

Since they are accounting the gain as capital gain it will not reflect in the p&l . So if you hold until dec-2010 you can double your money.

For short term it is not worth. We have several shares with high potential to grow in short term.

[joypsam1]