Dubai Investments (DIC) profit announcement released, see next post. Title changed from DIC 2008 profit forecast (this post) [/edit]  Updated post with summary analysis of DIC results [/edit]
DIC 2008 Q4 loss Dh-110m -125%, FY 1.6bn +3% 01 Feb 2009
PE (annualised) 7 2.4 8.1 2 -75%
Price to Book Value (PBV) 2.4 0.8 0.4 -83% -49% 2.4 0.4 -83%
Profit Margin (ROS) 76% 72% 74%
Return on Assets (ROA) 17% 18% -3.1% -120% -120% 15% 11% -25%
Return on Equity (ROE) 35% 34% -6.1% -120% -120% 30% 22% -29%
PE, ROA, and ROE are annualised figures
If Balance Sheet figures not supplied then data from previous quarter is used to calculate financial ratios
DIC 4th quarter data not supplied so Q4 figures calculated from FY and M9 data but are not confirmed
Dubai Investments (DIC) may take a hit from its financial investments in the fourth quarter but solid group company results are likely to offset that, the company's chief executive said on Sunday.
"I don't know how strong the earnings are going to be," Khalid bin Kalban said, adding the firm had yet to close all its positions for 2008. "The (overall) company is doing well, but our financial investments have taken a major hit. There are good earnings from other group companies and this will compensate for that."
Dubai Investments, the UAE's largest diversified holding firm by market value, had third-quarter net profit of 635 million dirhams ($172.9 million), a rise of 137 per cent. Its plan to sell a stake in one of its companies each year remains on track but poor market conditions mean it will tread cautiously in 2009, bin Kalban said. Emirates Business quoted bin Kalban as saying the firm is willing to sell an up to 40-per cent in its subsidiaries when market conditions improve.
"This is the plan from day one, everything we do we look for an exit," bin Kalban said. "Earlier this year, we promised the market that when conditions were right we would sell stakes in one company each year and we did that this year."
The company, whose businesses range from glass-making to pharmaceuticals, sold a 40-per cent stake in private equity unit M'Sharie this year, raising 400 million dirhams, but its planned initial public offering for the division remains on hold. Plans to follow the M'Sharie move with another sale in 2009 are uncertain amid fallout from the global financial crisis. "It all depends on the market conditions. In real estate, we don't think the market is right in 2009 but maybe in manufacturing it will be better."
Dubai Investments stock closed down 1.02 per cent to 97 fils on the Dubai index on Thursday, its lowest level in four years. The stock, which had a mid-year peak of 4.61 dirhams in June, has fallen 75 per cent this year.
UAE markets were closed on Sunday to mark the start of the Islamic new year.
Press release just issued with Dubai Investment Company (DIC) profits for 2008. In Arabic, will post English version if/when I receive it. Here's what I've pulled out of it so far (DIC shares fell 3.1% to AED 0.95 today).
2008 FY net profit AED 1.56 billion, 4% growth
2008 Q4 loss of AED 0.11 billion (110 million) (my calculation, not confirmed)
2008 FY revenue AED 3.41 billion, 29% growth
Share portfolio took a hit of AED 368 million (or that's what it's worth - I'm not sure)
Total Assets 31 December 2008 AED 14.11 billion, up 38% from AED 10.24 billion
Shareholders Equity 31 December 2008 AED 7.23 billion, up 46% from AED 4.96 bn (I think)
Ah, here's the Dubai Investments press release. Not much comment on the overall loss in Q4 except for the part about losses on investments.
Press Release 01 February 2009:
Dubai Investments reports net profit of AED 1.56 billion for the year ended 31 December 2008
Dubai Investments PJSC (DIC) reported its results for the year ended 31 December 2008, with consolidated total income of AED 4.41 billion, which is 29 per cent more than the total income of AED 3.41 billion for the year ended 31 December 2007. The net profit for the year was AED 1.56 billion, 4% more than the net profit of AED 1.50 billion for the previous year.
DI’s profit for the year from its core business activities increased to AED 1,116 million from AED 925 million for the previous year, representing a growth of 21%. However, DI’s results for the year were impacted due to significant write-downs of AED 368 million, owing to mark-to-market requirements in its investment portfolio of shares, bonds and structured products. In spite of this, DI managed to post an overall increase of 4% in net profit for the year. DI has adopted a strategy of maintaining high liquidity with strong cash flows generated from its business activities.
Total Assets as at 31 December 2008 are AED 14.11 billion, representing a growth of 38% over the Assets of AED 10.24 billion at 31 December 2007. Net Worth as at 31 December 2008 is AED 7.23 billion, a growth of 46 per cent over the Net Worth of AED 4.96 billion at 31 December 2007. This was achieved due to substantial net profits realized and increase in share capital on rights issue.
The return on average Net Worth achieved for the year is 26% and return on average Share Capital is 58%. The earnings per share (EPS) for the year is AED 0.48, while the return on average Assets achieved for the year is 13%.
“Dubai Investments achieved its best ever annual results in spite of extremely challenging economic and financial conditions,” said Khalid Bin Kalban, Managing Director and CEO of Dubai Investments. “The fundamentals of our business remain strong due to the diversified investment base, and we are well placed to take advantage of potential opportunities in the coming months due to our strong liquidity position.”
Very surprising results. I think being in investment sector, DI should have taken huge loss. Let us wait for 1Q, where may be real picture should come out.
SW, any idea how much income they have recognised as fair valuation gain on property? The report only talk about loss of AED 368 on fair valuation.
The report only talk about loss of AED 368 on fair valuation.
I think DIC were referring to stock investment write-downs for that amount rather than property or land revaluation. Until 2008 Q4 financial statements are released, we won't know what the details are (which I guess is a reason why companies issue press releases without financial statements - to hide financial data from their owners). Unless someone wants to ask DIC .
In all the times I've asked a company a question and/or for financial statements, I've rarely received a response, let alone a favorable one. Most of the time I'm told to wait or vist the market website. So I don't bother anymore but I'll have another try with DIC. I'll update here if I get any response. _________________ UAE IPO list | posting guidelines
I must say sharewadi is doing a great job for us novices in investments-
The comments on DIC financial report for 2008 are very useful- I wonder if the companies declaring huge profits have any obligation to hand a sizeable cash dividend too--to their investors-----
Can one look up for a good payout by DIC?
All comments are welcome-
Thanks for the positive feedback . As far as I know, unless a company has a comment about dividends in their Articles of Association or IPO Prospectus or Memorandum of Something, they are not under any obligation to declare a dividend. And even if they do have a comment, it's usually subject to board recommendation and shareholder approval.
Can one look up for a good payout by DIC?
Looking at DIC dividend history, I wouldn't be too hopeful of any cash dividend - they lost money in Q4 and most companies are keeping cash for the time being. Something like a 10% share dividend looks possible. DIC dividends in previous years were:
Although DIC saw a 3% increase in Net Profit for the full year, the final result includes AED 235m (profit, revenue was AED 400m) from the M'Sharie sale during the year. If that is treated as a one-off extraordinary item, and excluded from Net Profits, then there was a substantial fall overall. But it's not clear to me whether it's reasonable to include or exclude that income - after all, Dubai Investments is an investment company.
There's a discrepancy between stated and calculated values of Return on Assets (ROA). Press Release from last week says "the return on average Assets achieved for the year is 13%" but my calculation is 11%. It's not a big difference but looks bigger than a rounding error . If anyone can see an explanation, please reply.
There was also a comment from DIC about the increase in Assets from AED 10 bn to AED 14 bn that "This was achieved due to substantial net profits realized and increase in share capital on rights issue." As far as I know, the rights issue was 858m shares at par (no premium) so that would mean an increase of AED 858m. Add on the AED 1.6 bn net profit, AED 0.22 bn from 2007 10% share dividend, and I get AED 2.68 bn. I don't know where the other AED 1.3 billion increase in Total Assets comes from . Any ideas anyone? _________________ UAE IPO list | posting guidelines
My understanding from the press report is slightly different from you. I believe DIC have calculated all the numbers perfectly right.
The return on assets(ROA) are calculated always on average assets. So accordingly 13% is perfectly right.
The quote, "This was achieved due to substantial net profits realized and increase in share capital on rights issue.", I believe refers to increase in net worth which is also right as per my calculation.
Coming to inclusion of profit on Msharie sale, here my opinion is DIC is being a investment company, it is normal profit to them in the regular cource of business and not extraordinary item.
I would say the results declared by DIC are very good simply because it is an investment company and everywhere this was the sector which was badly hit by financial crisis.
I thought there were two possible terms used - Return on Assets (ROA) which calculates return based on assets as of the date of the accounts (or the date of calculation if that information is available), and Return on Average Assets (ROAA) which is return on average asset value during the period. But yes, I hadn't thought of checking ROAA - the simplest way to do ROAA is to take average of asset value at beginning and end of period i.e. AED (10 + 14) / 2 = AED 12 bn and therefore ROAA = 13.3% so now I see where the figure comes from.
 My bad - I see DIC did specifically say "average Assets" [/edit]
"Net Worth" is obviously referring to Shareholder's Equity. I see what you mean then, DIC were referring to Equity, not Assets, so the AED 2.68 billion figure I had is close enough (I presume there was a write down for investments in Q4). Then the greater increase in Assets might be due to acquisitions or similar?
MSharie - yes, what you say makes sense. DIC is not a pure investment company like an investment bank which is why I was struggling with that one. _________________ UAE IPO list | posting guidelines
I think DIC is the most safe company compare to other listed companies with healthy cash flow and income from rental lease will keep them strong. They are quite diversifed in all sectors. It seems they have booked the investment losses, going forward quarter1 will be intresting to see. Any suggestions for buying DI at current market price?
I have to agree with you maq. DIC is one of the safest bet in market now. They are the most conservative company in every respect.
My view is they will not propose any dividend for this year, definately not cash dividend, may be share dividend from shareholders pressure. And this strategy have been followed for the past many years. May be in the past 5 or 6 years they have declared just 2 times cash dividends and all the years they were intelligent enough to broaden thier equity base by declaring bonusses and keeping shareholders happy.?
Even I am surprised by the consistency in their management team. BOD is also from solid background unlike many companies where you find novices. Accounting policies are very conservative.
I would say accumulate DIC on dips in small quantities.
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