Aldar Target Price Al Futtaim

[Cash King]

Dear Friends,

I get this information from my friend. It is a research analysis from Al Futtaim Secutiries. Following is the summary:

Al Futtaim Securities ?? January 2010:

A Play on Near-Term Catalysts We revisit our estimates to reflect renewed weakness in the UAE property market following the standstill announcement Delay land sales but bring forward delivery of Al Gurm resort to 2010e from 2011e; 2009/10e EPS estimates cut by 11% and 18%, respectively Maintain our “Buy” recommendation but revise our TP to AED6.0/share from AED6.2/share. Divestment of Yas Race Track a potential short-term catalyst UAE property market lost momentum in 4Q09 on the back of the standstill announcement, slipping back to previous lows. As we highlighted in our latest Property Beat report published on 12 January 2010, following a brief recovery in 3Q09, transaction prices were driven down (-5% in October and November 2009) by tightened liquidity in 4Q09. Mortgage values dropped to 21% of total transactions in November 2009 from a strong recovery to 32% in September 2009. Current property price levels of AED14,000/m² imply a 4% developer margin on Aldar’s average plot selling price of AED4,000/m². Working backward, we estimate that property prices in Abu Dhabi need to rise by 30% to justify a residual land value of AED4,000/m² (20% developer margin). Accordingly, we feel demand/land sales are likely to remain weak going into this year. We revisit our estimates to reflect weaker sales in 2010e. While we did not previously assume any meaningful property launches in 2010e, we had forecast significant plot sales (AED1.2 billion), which we now partially push back one year. However, we bring forward the delivery of Al Gurm Resort to 2010e from 2011e as it seems to be running ahead of schedule. Therefore, we cut our revenue forecasts by 25% for 2009e and 8% for 2010e. We decrease our EPS estimates by 11% for 2009e and 18% for 2010e. We reiterate our “Buy” rating but revise our TP to AED6.0/share from AED6.2/share. Since plot sales only account for 10% of our valuation, the above adjustments had no meaningful impact. Given the weak demand for off-plan property and plots, we believe rental properties are likely to drive Aldar’s valuation in the medium term (76% of value). In our model we only include properties that are currently under construction with secure funding. Taking impairments on race track unlikely, in our opinion. In our initiation note we identified the divestment of the F1 race track as a potential short-term catalyst. Considering the nature of the project, we feel Aldar could monetize its investment by attempting to offload it to a strategic investor. A potential divestment could add AED1.1/share, on our estimates.

Thanks & Kind Regards to all.