Aabar Investments (AABAR) net profit for 2008 was AED 722m, more than triple the AED 226m they earnt in 2007, but Revenue was down to nothing for 2008, and there was a Net Operating Loss of AED 127m. Does that indicate doing nothing is the best option? A large part of the profit will come from selling assets (probably most of it). Total Assets have decreased from AED 5.1 billion at the end of 2007 to AED 3.4 billion at the end of 2008. No press release received yet but I'll update with summary reports shortly (I hope) ...
ADX 28 January 2009 (pm):
(AABAR) Aabar Investment discloses preliminary financial results for the year ended 2008
EPS figures calculated from Net Profit / 900,000,000 shares outstanding.
AABAR share price as of 28 Jan 2009 was 1.48 dhs, so 2008 estimated PE is about 1.48 / 0.52 = 2.8, based on Q4 earnings, which looks like a possible bargain ... then again, most other companies seem to be trading at those low levels after the recent market crash. 2008 PE based on FY earnings is 1.48 / 0.80 = 1.8, which makes shares look cheaper but that is a result of FY profit boosted by the AED 550m Aabar earnt in Q2 from the sale of one of its subsidiaries.
Oddly, Aabar seems to have timed the sale of its subsidiaries quite nicely, in retrospect. They built up cash before the financial crisis hit, paid off debts, renamed themselves as Aabar Investments, and are now sitting on a pile of over AED 2 billion in cash (or were at the end of September 2008) with little debt. Given the bargain basement prices of assets around the world, Aabar could be well positioned to make a bit of money. A few months ago I was wondering why Aabar was selling everything. Did they know what was coming?
Aabar have also arranged a convertible bond with IPIC for another AED 6.7 billion, are buying AIG Private Bank Ltd outright, and have bought a stake in an Italian toll road company - Atlantia SpA. Aabar shares fell 2% to AED 1.40 today. If you have confidence in their investment picking abilities, maybe this is a stock to look at?
PE (annualised) 4 33.9 2.9 -27% -91% 17.2 1.8 -89%
Price to Book Value (PBV) 2.1 1.2 0.6 -72% -51% 2.1 0.6 -73%
Profit Margin (ROS) 210% 11%
Return on Assets (ROA) 19% 3.5% 14% -29% 290% 4.5% 21% 380%
Return on Equity (ROE) 53% 3.5% 20% -62% 470% 12% 31% 150%
PE, ROA, and ROE are annualised figures. AABAR 4th quarter data not supplied so Q4 figures calculated from FY and M9 data but are not confirmed. Because Aabar sold Dalma (in 2007) and Pearl Energy (in 2008), that introduced difficulties in trying to compare financial data for 2007 and 2008, for example Aabar gave a Revenue figure for Peal Energy for 2008 net of royalties but didn't give the figure for royalties (as far as I could tell). And trying to calculate Q4 figures, except for Net Profit, was also difficult for the same reason. So I'll leave it to someone else with more interest in Aabar numbers .
Aabar's balance sheet looks healthy enough to me. As of the end of 2008, Aabar have AED 761m worth of Investment Properties, AED 1.3 bn investment in Atlantia. Atlantia is a toll road company in Italy, so unless Italians stop driving cars (seems quite unlikely), you would expect cashflow to keep rolling in from that investment. There's also AED 1.3bn in cash and bank balances which is more than enough to cover the long term loan of AED 893m and AED 177m worth of Accounts Payable. Aabar are also receiving (or have received) AED 1.5 billion from IPIC for the first tranche of the convertible bond. Other liabilities appear to be negligible in comparison. Operating expenses should be relatively low given that Aabar no longer owns oil or gas production and exploration facilities. Which all put together probably helps explain why Aabar share price has not crumbled as much as many other companies in the UAE.
Aabar shares are limit up 10% to AED 1.73 today. Whether that's because the financial statements were released today (preliminary results were out 3 weeks ago), or the disclosure today of the Aabar Reem Island investment (of AED 5 billion), I don't know. Trading volume is moderate so far but probably limited by the lack of willing sellers. The ADX index overall is up 2%.
Board of Directors report from Aabar Investments (AABAR). More of an overview of 2008 operations than a comprehensive report to shareholders, but better than you see from most UAE companies. No date on report but Auditor's Report supplied with financial statements was dated 16 February 2009.
ADX 18 February 2009 (am):
Aabar discloses board report and financial results for the year ended 2008
Aabar Investments PJSC (undated):
Board of Directors Report for 2008
Dear Shareholders
We are pleased to present our report of our business activities for the year 2008 together with the consolidated financial statement for the period ended 31 December 2008 end the audit report thereon.
Company Business Performance
As part of our plan to invest across industry sectors, we achieved significant milestones in 2008. In May 2008, we successfully completed the sale of our oil and gas subsidiary, Pearl Energy Ltd, turning a profit of AED 692 million as gain on sale. Shortly thereafter, we also completely redeemed our convertible sukuk in the second half of 2008.
In September 2008, we then signed an agreement to issue mandatory convertible bonds to International Petroleum Investment Company (IPIC) as a strategic shareholder for AED 6.68 billion which will further strengthen our capital base and open more profitable avenues of investments. In November 2008, we acquired prime development properties In the Emirate of Abu Dhabi as part of our strategy to invest In the local real estate sector. In the financial services sector, we entered into an agreement with American Insurance Group (AIG) to acquire 100% of AIG Private Bank Ltd in December 2006. We expect to complete the AIG Private Bank Ltd acquisition within the first half of 2009. At the year-end Aabar also acquired a 3.34% stake in Atlantla S.p.A, a publicly traded Italian toll road company which is the largest concessionaire on the Italian autostrade network.
Financial Performance
Aabar reported AED 722 million in net profit to shareholders for the twelve months ended 31 December 2008 with basic and diluted earnings per share of 80 fils.
Total shareholders' equity as of 31 December 2008 was AED 2.306 million in comparison to the 31 December 2007 amount of AED 1.821 million. The 2008 shareholders' equity represents a net worth of AED 2.56 per share.
I would like to take this opportunity to thank Aabar staff for their good performance, and my fellow board members and our shareholders for their continued support and look forward to another successful year ahead.
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