Aldar Properties _ALDR.AD_

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					Aldar Properties (ALDR.AD)                                                                                                 February 26, 2009


Key Data                                                              For the year ended December 31, 2008, Aldar Properties reported a
                                                                      77.5% increase in net profits to AED 3,446.67 million as opposed to AED
Listing                              Abu Dhabi Stock Exchange
                                                                      1,941.30 million in 2007. This impressive performance was attributable to
CMP (AED)                                                     2.23    a near four-fold rise in sales. Revenues reached AED 4,978.34 million, of
YTD Change (%)                                                -43.8   which sale of properties contributed AED 4,802.03 million. There was
52-week High/Low (AED)                              13.30 / 2.04      also a 98.5% growth in shares of net profits from Aldar’s associates and
                                                                      joint ventures. Importantly, the increase in revenue was mainly on
Market Capitalization (AED Mn)                          5,748.71
                                                                      account of 316.4% surge in the property development & sales segment;
EPS (AED)                                                     1.39    alongside, land sales and investment properties portfolio reported an
BVPS (AED)                                                    6.22    increase of 306.4% and 188.6%, respectively. Rental income from
P/E                                                           1.67    investment properties went up by 139.1% even as contribution from
P/BV                                                          0.36
                                                                      transfer fees came to AED 50.43 million from AED 3.88 million. At the
                                                                      same time, the company’s gross profit improved 379.2% to AED
Div. Yield (%)                                                 5.6
                                                                      2,683.44 million despite a 244.1% increase in direct costs. Meanwhile,
Source: Zawya
                                                                      general & administrative expenses soared 175.8% and selling &
Price History                                                         marketing expenses jumped 26.2% to AED 154.43 million. There was an
                                                                      18.4% drop in finance costs. Investment income rose 22.3% to AED
                                                                      480.13 million. Moreover, during the given period, the contribution from
                                                                      associated companies and joint ventures to net profit recorded a two-fold
                                                                      increase to AED 46.96 million. The company reported an EPS of AED
                                                                      1.39 as against AED 1.10 in 2007.

                                                                      On the balance sheet side, Aldar’s total assets grew 119.9% to AED
                                                                      49,766.98 million, of which assets from property development & sales
                                                                      made up for AED 28,602.59 million. Shareholders’ equity went up
                                                                      108.5% to AED 16,032.36 million as retained earnings augmented 94%.
                                                                      Moreover, return on equity (ROE) reached 21.5% from 25.2%, and return
                                                                      on assets (ROA) reached 6.9% from 8.6%. Also, shareholders’ equity to
                                                                      assets ratio fell to 32.2% from 34% in 2007
Financial Summary
                                                                      Company Profile
AED (In million)                     2008       2007    % chg         Aldar Properties PJSC (Aldar), established in October 2004 as a real
Revenue                           4,978.34   1,226.84    305.8        estate developer of retail, residential, commercial, entertainment, and
Direct Costs                      2,294.90    666.88     244.1        hospitality properties, is the second-largest real estate company in terms
                                                                      of total assets in the Gulf region. On the operational front, Aldar is
Gross Profit                      2,683.44    559.96     379.2
                                                                      presently engaged in developing the 5.2 million sqmt Al Raha Beach
Fair value gain on
                                                                      worth USD 18 billion. Further, it is also involved in building an optimal
investment properties             1,532.58   1,821.24    -15.8
                                                                      mix of residential, retail, office and leisure projects. Aldar owns over 50
Selling & Marketing Expense        154.43     122.40      26.2
                                                                      million sqmt metres of land at strategic locations throughout Abu Dhabi
Finance Costs                      370.83     454.22     -18.4        and has already announced more than USD 72 billion worth of
Net Profit                        3,446.67   1,941.30     77.5        developments.

                                                                      Industry Overview
Share Capital                     2,577.90   2,223.10     16.0
                                                                      According to the Arab Administrative Development Organization (AADO),
Retained Earnings                 5,885.35   3,033.44     94.0        around 50% of all investments in the UAE, and the rest of GCC region, is
Shareholders' Equity             16,032.36   7,689.31    108.5        invested in the property sector, as against just 30% in other Arab states.
Total Assets                     49,766.98 22,627.45     119.9        Investments into the real estate sector in Dubai has crossed the AED
                                                                      158 billion mark in 2008 (till date), while another study by the Abu Dhabi
                                                                      Chamber of Commerce & Industry (ADCCI) reveals that projects in
EPS (AED)                             1.34       0.87     -
                                                                      excess of AED 1.30 trillion are underway and will be implemented in Abu
Return on Equity (%)                  21.5       25.2     -           Dhabi in the next few years. This includes construction and property
Return on Assets (%)                   6.9        8.6     -           ventures worth over AED 752 billion. Even though capacity constraints
                                                                      have delayed some large real estate projects, especially in Dubai, many
                                                                      of these are anticipated to be completed soon.
During 2008, industry growth was impeded by spiralling material costs. Currently, close to 60% of construction projects in the Gulf have
been postponed or shelved due to the global credit crunch. As majority funds come via oil wealth, plummeting crude prices would further
impact companies and investors. Nevertheless, according to figures from the Dubai land department, value of the total land transactions
jumped 47.5% to AED 70.2 billion in 2008 (AED 47.6 billion:2007). A total of 5,837 transactions were recorded in 2008 (3,997 transactions:
2007). Meanwhile, the population in Dubai is likely to decline over the next 2 years as the troubled real estate and construction sector will
reduce immigration and many people are forced to leave. On an average, 1,500 work permits and visas are being cancelled in Dubai each
day as companies lay off employees. Over half of Dubai's population is employed in the real estate sector, which is suffering from
oversupply and restricted financing. Moreover, property prices fell 8% in 4Q08 even as Dubai’s office rentals dropped 11-16%. Property
prices in Abu Dhabi fell by an average 20%, from their peak in September 2008 due to deteriorating economic conditions, disappearance
of speculative buyers and lack of financing. The biggest drop was witnessed in the high-end property segment. Despite an average price
increase of 18% for property targeting the middle-income bracket in 2008, the downward trend hit properties across the board in this
segment during the fourth quarter of 2008. Meanwhile, Abu Dhabi’s local real estate leaders believe that the property sector is set to defy
the global economic downturn and maintain positive growth through 2009 despite an expected drop in demand because of the liquidity
crunch. While the UAE is planning to enact a set of federal laws to guide visa-granting procedures related to freehold property ownership,
construction growth rates are expected to slow to 13% in 2010 from 20% currently.

Recent Developments
On February 10, 2009, Aldar Properties revealed that although the already announced projects are on track, it will consider changing its
strategy for its new projects. It would now like to redesign these projects to target the middle market. Aldar is presently working on one of
the biggest project on Yas Island - spread over 24.9 million sqmt, which includes a Warner Bros and a Ferrari theme park. Aldar’s real
estate projects are estimated to have exceeded USD 72 billion with the entire portfolio slated to be completed and delivered over a period
of 7 to 10 years. Aldar’s Al Raha Beach resort is on track for timely completion by 2014, as well as the Yas Island project which is likely to
be completed as scheduled. In January 2009, Aldar appointed John Buck International as its portfolio managing agent to provide the
company with commercial property management services. In December 2008, Aldar signed an MoU with the National Bank of Ras Al
Khaimah to provide mortgage services for the company's investors in Al Raha Beach and Yas Island projects. In November 2008, Aldar
signed exclusive agreements with The Ritz-Carlton Hotels Co., wherein the latter would manage the development of hotels in Abu Dhabi.


Outlook
The United Arab Emirates' property sector has been hit by the economic downturn and a slump in demand has lead to developers halting
or rethinking luxury projects. Several Dubai-based businesses are gearing up for down-sizing, shelving expansion plans and new start-up
campaigns indefinitely. The current liquidity crunch has seen new infrastructure project launches delayed or cancelled with strict project
and resource rationalisation underway. Developers and construction companies are already reducing their work force, and stringent visa
regulations could worsen the situation for the sector, which is likely to be suffer further by declining property prices and reducing
population. The property market is in a freefall and funding is hard to get.

On the other hand, even under the current negative environment, Aldar Properties has maintained its leadership position in the real estate
segment within the region. It is already the biggest property developer in Abu Dhabi in terms of market capitalization, land bank, and
development projects with land bank of 50 million sqmt. The company’s closeness with the government will also benefit it significantly from
further economic diversification. Looking forward to 2009, Aldar would see one of its most active years as the company is looking at
changing the strategy and redesigning projects to target the middle market. Aldar is also currently focusing on developments in Abu Dhabi
with plans to expand into international markets (both mature and emerging).

Currently, Aldar’s stock is trading at a P/E multiple of 1.67x based on its 2008 earnings and at a P/B multiple of 0.36x on its 2008 BVPS.
However, the stock has lost 43.8% since the beginning of this year, as compared to the ADX YTD loss of 7.6%. In 2008 Aldar’s stock price
had lost 67.5%. Considering the above factors and the crumbling UAE real estate market, we revise our OVERWEIGHT opinion on the
stock to a NEUTRAL.




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DISCLAIMER:
All reasonable care has been taken to ensure that the information contained herein is not misleading or untrue at the time of publication, but we make no
representation as to its accuracy or completeness. All information is for the private use of the person to whom it is provided without any liability whatsoever
on the part of TAIB Securities WLL, any associated company or the employees thereof. Nothing contained herein should be construed as an offer to buy or
sell or a solicitation of an offer to buy or sell. The value of any investment may fall as well as rise. Past performance is no guide to the future. The rate of
exchange between currencies may cause the value of the investment to increase or diminish. Consequently, investors may not get back the full value of
their original investment

				
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