DIC - A Good buy? - analysis

[fimah]

Hi SW,
I will try to continue here.

Making a profit of 488 million in Q1 2008 this size talks of their capability.
Gradual growth, no special jumps in any previous period
DIC is in the net profit club of AED 1 billion and above
How many companies are member to the NP 1 billion club
At least DIC is out from that club in terms of share price
Dubai Industrial Part leased out substantially, if you visit there so many corporates have made their logistics infrastructure set up there.
This earns DIC with a good regular income.

[fimah]

I had seen share price of DIC at 22 during the last bull run.
Today I can see the price at 3.77 !!
Offcourse discounted periodically with consistent dividends/bonus issues and right issues.
When DIC was 5, UPP was around 3
When DIC was 6, Tamweel was in the range of 3.6
DIC and Arabtech was in the same price level recently!
...nothing material changed with DIC, but grown only
But people say real estate revaluations as the reason for their (DIC) profits.
First we will analyse this, then shall decide to keep or sell DIC from our bag.
I will continue the review only if some one boost me.....SW does not like "stimulating"..... fimah

[vip_seifi]

Hi to everyone on SW.com....

How about having a pool for DIC as to if its a good BUY at the current prices...?

[investor]

For me technically its not a buy, however 3.74 is the last low hence it might find some resistance there but its a risk I believe. Check for any announcement and other news that could help it recovery.

Cheers

[sam111sam]

Dear All

DIC Stock Price looks attractive to me , but only the investors' general view can decide the fare price for DIC.

My guess is that most funds avoid DIC because of lack of details in their disclosures, which does not allow them to form a solid forecast. I always get the feeling that DIC does not CARE about investors opinions (similar to Emaar)

I'm still a believer in fundamentals and consitancy. Gov support is also a key. I think DIC is excellant investment for the mid-long term....But most investors in DFM are very short term

Now back the the recent drop in DIC price, ..It is very much in line with DFM Index and other good stocks like Tamweel, Amlak, DFM,....

So in my view, if you have DIC shares don't sell now...too late
If you are planning to buy, wait till you see the price goes above the 20 days SMA

[sharewadi]

[sharewadi]

[fimah]

Hi SW,
You did that for me already " "..

[sharewadi]

[thajuddeen]

DIC price drop out paced others at the moment on technical comparison. I thought I will buy it at 3.71 but it reached 3.73 only and closed at the highest. There is a high possibility that other shares could also fall in that range in the coming days or DIC can have a quick rebound.

[indigo]

The current right issue is a factor to be considered.

When are the rights issue shares going to be allotted? (SW can you give an informed update?)

I don't think its a good buy right now price need not be the only consideration. I would advise to wait for the rights issue to be settled, let the shares float into the market and the price to settle down.

If price is a factor and P/Bv is considered than DFM & Arabtec are very very expensive, but people out there don't think so.....

[sharewadi]

[fimah]

DIC is widening its business base. Some are not good and some proved extremely good for them, the DIP for example. Taking experience from there, they are puting a small money in Ajman and Fujairah as well. This will only add more money to them.....watch this stock and its current earnings against its share price, much better than any other stock...sorry, being late, I will soon come with a good analysis....fimah

[sharewadi]

[fimah]

Hi Tajudeen,
recently your recent views on Agthia and RAK properties proved exactly right.

if we compare any other Real estate shares, UPP, Emaar, Al Dar, Sorouh, and all being revalueing their assets, while DIC price looks very very cheap irrespective of the fact that DIC has a core rental income to support

what is your forecast on DIC. I feel that the volumes will be up from 22nd, the rights shares allotment / refunds expected.....fimah

[laser]

Hi Fimah,

This is the support and resistance for DIC. Also middleeastbulls.com confirms buy. Lets hope good.


R3 ------------- 3.90 3.45%
RM2 ----------- 3.88 2.79%
R2 ------------- 3.85 2.12%
RM1 ----------- 3.83 1.59%
R1 ------------- 3.81 1.06%
Pivot Point 3.76 -0.27%
S1 ------------- 3.72 -1.33%
SM1 ----------- 3.70 -1.99%
S2 ------------- 3.67 -2.65%
SM2 ----------- 3.65 -3.18
S3 ------------- 3.63 -3.71%

[fimah]

Please see a recommendation below by Taib (bahrain based bank)

TAIB recommends an 'overweight' on Dubai Investments
this is report seen published in Mubasher.info on 9/May

mubasher.info 09 May 2008:

TAIB Bank initiated coverage on Dubai Investments (DI), forecasting the company to maintain its growth momentum in the next years and reiterating its overweight recommendation on the stock. DI FY07 profit leapt 57.3% to AED 1.51 billion, compared to AED 0.99 billion in FY06. Thus, EPS rose from AED 0.52 to AED 0.96, spurred by increase in sales and investments. Sales and revenues rose 83.3% to $1.99 billion, while net property sales increased six-fold to AED 655.2 million in FY07. Net revenues advanced 78.8% to AED 3.41 billion, compared to AED 1.91 billion. Investment property sales grew significantly to AED 0.17 billion. Q1-08 financial results showed that net earnings rose 9.11% to AED 491.1 million, compared to AED 438.7 million, sending EPS from AED 0.19 to AED 0.21. DI to invest approx. AED 3 bln DI is the largest investment company listed on the Dubai bourse. The company is making strong profits, owing to subsidiaries' solid performances. The group owns almost 45 companies in its portfolio, including 10 diversified investments in manufacturing, agriculture, pharmaceuticals, wholesale and retail trade, industrial and commercial property development as well as transportation. DI assets reach above AED 10 billion. The investment company will invest approx. AED 3 billion this year, through new projects in Qatar, India, Abu Dhabi and Jordan. DI is investing $25 million in a glass manufacturing unit and $18 million in a steel fabrication firm in Qatar. It has also formed an equally-owned joint venture in India to set up a $25 million steel fabrication plant near Mumbai. A production facility, under construction at DIP, is established with a French partner and will start up by 2009. The company can benefit from its performance in Fujairah on UAE rapid growth. DI expects to form 3 or 4 projects in the next 6 months, totaling about $100 million in KSA. Finalizing plans to buy 4 more companies in various sectors, M’Sharie’s, a subsidiary of DI, will increase its affiliates from 18 to 22. Also, the newly commissioned Emirates Extruded Polystyrene (EEP) will provide UAE and GCC markets with 2.500 metric tpa of XPS. Demand for insulation materials is estimated to reach 1.075 million cubic meters, or 37,627 tons by 2012, due to UAE law on using -saving and environment-friendly building materials. EEP inked an agreement with Cloissal for buying 50% of manufactured products. International investors have planned to seal long-term deals with EEP, that targets to build a second production line. The report said DI is trading at a P/E of 8.72 and a P/B of 2.65. The stock added 3.3% since 2008-start against a dip of 3.3% in DFM Index. DI will continue expansions to enhance its position in the region. Khaled bin Kalban had revealed that DI rights issue was covered by 74.41%, in the offering that was extended to May 8th. Also, the board rejected shareholders request for suing EFG-Hermes after initiating coverage on April 7th, setting DI fair value at AED 3.12, affecting shareholders interests. Hermes had issued a report on Dec. 4th and set stock fair value at AED 3.95, 26.85% lower than market value of AED 5.40 at that time.

Now I learn gradually as to the reasons for lower price. Vested interests so that they can buy at lows. Friends hold on to it tight, don't loose it. But is a long term story to come in....fimah

[sharewadi]

See also the TAIB DIC report topic I've just added, with some comments, and a link to full report. It's only 2 pages though, and most of it is background reading .
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[thajuddeen]

Hi fimah,

I didn't go to DIC fundamentals.

I was working some formulas to buy DIC and that gave me 3.71 to target as I mentioned elsewhere. Yesterday it hit my target price at 3.71 and rebounded to a buyconfirmed! I didn't place an order yesterday at that price.

Somtimes when the right issue shares come to the market, the price will get a boost.

Generally my feeling is that market will start falling heavily after a small rebound in the coming days.

[fimah]

Thanks Taj, but your analysis on its fundementals will boost our knowledge..

It seems that TAIB analysis on its PE ratio at 8.72 is wrong. From where they got this?

It is much cheaper than this on a rough numbering. Even on the increased capital (latest), where they have just received that money.... fimah

[sharewadi]

[farhadcub]

hi guys,
are we going to c a new low on DIC or is it safe to enter now?
thanks guys..
good luck 2 everyone...

[thajuddeen]

DIC has reached a 10% correction from 4.06 peak at 3.65 and is finding some support. DIB is the only share, I noticed, past 10% correction mark after distribution, from 10.20 to 8.90.

[fimah]

DIC was the most active share today in DFM.

Rights issue share have come in. After the capital increase and bonus, the capital now stands at AED 3.24 billion

Let us forget the benefit of new capital of more than AED 1 billion (rights + bonus) with them from today. A conservative Net profit figure based on their old funds with them could be Q1-2008 AED 488M X 4 = Net profit AED 1.95 Billion

Earnings per share based on the above shall be =0.60 dirham
2008 PE ratio therefore will be price (3.70) / 0.60 = 6.15 . An excellent position when SW says that the market PE is around 16-18 today. Book value on the other hand is just 1.93.

DIC share price @ AED 6 gives a PE ratio of 9.97
DIC share price @ AED 10 gives a PE ratio of 16.6 (market average)

The real benefit of increase in capital will come only in the future and not estimated here.

DIC is a long term story....fimah

[sharewadi]