Deyaar 2009 profit forecast

[sharewadi]

EB forecasts profit of AED 540 million based on comments from the CEO that Deyaar (DEYAAR) is on track to make a similar profit in 2009 as they did in 2007, which was AED 540m.

Deyaar 2009 Q2 profit figure released yesterday was AED 75m, and Deyaar 2009 Q1 profit was AED 54.5 which makes a total of AED 129m. So for them to make another AED 410 million in the second half of 2009 sounds a bit optimistic given the state of the property market in the UAE. Are they really going to make AED 200m in each of Q3 and Q4 2009? Admittedly, they did in Q3 and Q4 of 2007 but that was when the Dubai property market was booming.

It seems more realistic to use the first two quarters of this year as a guide, and if we're to be optimistic, use the growth from Q1 to Q2 of 42% as an indicator to forecast AED 106m for Q3 and AED 151 for Q4 (and even that sounds overly generous to me), to get a full year figure of AED 387m. A more pessimistic view might be to say 2009 H2 would be similar to 2007 H1, for a total of AED 258m for FY2009.

There may be significant adjustments to revenues and or expenses depending on Deyaar's delivery pipeline, I haven't tried to allow for that.

So what's your pick punters? AED 258m, AED 387m, AED 540m, or something else?

Emirates Business 13 July 2009:

Deyaar expects Dh540m profit this year By Parag Deulgaonkar Deyaar Development (DEYAAR) expects to report full-year net profit similar to 2007's and has set up a dedicated team to renegotiate every contract, Chief Executive Marcus Giebel told Emirates Business yesterday. "We are right on track to achieve our 2007 results," Giebel said. The developer reported a net profit of Dh540 million in 2007 and Dh1.104bn in 2008. "We are a cash positive company and are paying all our bills. Our debt-to-equity ratio is just seven per cent. And this is what one has to look at in today's market condition." Giebel said the company has set up a contract negotiating team, which is in talks with contractors and looking to arrive at "mutually beneficial dealings". The developer yesterday said second quarter net profit rose 38 per cent to Dh75.4m compared to the previous quarter's Dh54.48m. Gross revenues were at Dh402m, while total assets reached Dh11.3bn. Total shareholders' equity stood at Dh7.4bn. On-year, however, the profit declined by 69 per cent compared to Dh246.9m of Q2 in 2008. "Our financial results for the second quarter have been in line with our expectations and are reflective of our sound fundamentals," Giebel said in a statement. "Deyaar's strong balance sheet performance in the first half of 2009 is a validation of our business strategy that has positioned us better to navigate through a challenging market. As a result of our unique approach, we remain on course to achieve our target of delivering seven projects in 2009." He said: "Year 2008 was an exceptional year for the real estate sector. And so a comparison between the quarters of this year and last year is not right." Deyaar's shares closed 1.41 per cent lower at Dh0.70 yesterday on the Dubai Financial Market. The company said it has committed Dh100m towards the Deyaar Property Opportunity Fund as seed capital as of June 30. The company has currently delivered five projects in the second quarter, including four residential projects in Dubai Silicon Oasis and its first project in Lebanon. By the end of the year, the company expects to deliver nearly four million square feet of units. Deyaar will also hand over The Citadel, a commercial tower in Business Bay, this month. In June, Giebel told this newspaper that the company was going to focus on villa and affordable housing segments during its international expansion plan. "We will target villa development and affordable housing in our international expansion plan, for which we have earmarked a significant amount of funding," he said. Deyaar has until now focused primarily on building towers and recently ventured into developing communities in the emirate. The company is currently investigating 10 to 15 emerging and developing countries and will eventually select five for its expansion programme. "Opportunities are manifold and they are good. But we need stringent execution plans and evaluations. We have to investigate 10 to 15 countries and then we can finalise the five right ones. The final selection will be made holistically and only if we have reports from these countries." The developer plans to deliver four million sq ft, or 25 per cent of its projects, this year, 25 per cent in 2010 and 2011, and consolidate another 25 per cent of its projects with the rest of its portfolio. A further 25 per cent of its projects are unannounced and unsold. According to Giebel, Deyaar is shifting to construction-linked payment plans for all its Dubai projects. "Construction-linked plans are the right thing to do. Most of our projects have been converted to construction-linked payment schedules, we are not 100 per cent there but we are close to it. There is an initiative going to link all payments to construction in the near future," he said.

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