HSBC say Sorouh (SOROUH) shares are cheap, giving them a target price of AED 6.60 (Sorouh is about AED 2.50 at the moment), however that's reduced from AED 9.90, and I thought HSBC had an even higher price on Surouh last year?
Funny thing is, HSBC forecast increased EPS for 2009 and 2010, yet still think shares are worth less now. See also ...
Exclude future projects; cut target price to AED6.60 from AED9.40, maintain Overweight (V) rating
Raising 2008 and 2009 estimates on faster plot sale recognition, cutting 2010 to reflect weaker outlook
Exclude SAS, Al Ghadeer and Lulu Island to account for value of existing backlog only
Reduce target price from AED9.40 to AED6.60, but maintain Overweight (V) rating solely on existing backlog
We raise our 2008 and 2009 EPS estimates by 42% and 77% respectively on evidence of faster plot sales recognition, but cut 2010 estimates by 32% to reflect weaker outlook.
Given the possibility of a protracted economic slowdown, we have moved to exclude Sheih Al Sedira and Lulu Island from our valuation. Also, although the company has already presold all of Al Ghadeer, we feel that payment realization could become more prolonged. Anecdotal evidence suggests that Sorouh has deferred payments on Al Ghadeer for six months. For the time being, we exclude the project from our valuation.
While Sorouh appears well positioned to withstand the current downturn given its early plot and unit presales, we feel that some of its projects are particularly exposed. Sorouh is in a unique position among the UAE developers. Its initial projects are centrally located, mostly presold with significant cash receipts and are nearing completion, reducing the risk of default and project cancellation. However, on the other hand, it’s recently granted land bank (mainly Sheih Al Sedira [SAS]) is isolated and still at an early stage of development.
We believe Abu Dhabi is likely to outperform Dubai in the near term, based on its underlying fundamentals. However, if current lending restrictions persist, Abu Dhabi could still see continued weakness, resulting in project delays or even cancellation.
Based on its existing backlog alone our revised DCF implies a fair value of AED6.60 down from AED9.40, implying a potential total return of 169%. Even if we assumed a WACC of 15% and a 0% terminal growth rate in determining our target price, this would indicate 48% potential return from the current price. We therefore reiterate our Overweight (V) rating on Sorouh’s existing backlog and potential return.
believe it or not , i never read a report on any company by any financial institution and came up to be true . we don't even know the bases on which those reports are introduced .
from my side i never trust reports neither newspapers they tend to make the financial image very bright. after i lost alot of money listning to those people , i only can trust financial statments .
You cannot post new topics in this forum You cannot reply to topics in this forum You cannot edit your posts in this forum You cannot delete your posts in this forum You cannot vote in polls in this forum
Disclaimer: Investing in stocks is risky, you can lose some or all of your money and/or other assets. Anything you read on this site should be regarded as the opinion of the author only and is not to be taken as advice to buy, sell, or hold stocks and/or any other investments. Seek professional advice and do your due diligence before making investment decisions. In particular, do not assume anything you read on this site is correct or accurate. You should accept that only you can be responsible for any investing decisions you make.
2008 FY
FAQ
Search
Print-friendly
Profile
Private messages
Register
Log in
