Bloomberg News

Sorouh Advances as Developers Net Climbs: Abu Dhabi Mover

July 31, 2012

Sorouh Real Estate PJSC (SOROUH), the Abu Dhabi developer that’s in merger talks with Aldar Properties PJSC (ALDAR), rallied to the highest close in seven weeks after quarterly profit jumped 34 percent on lower costs.

The shares gained 1.9 percent to 1.05 dirhams, the highest since June 11, at the close in Abu Dhabi. Net income in the second quarter rose to 148.2 million dirhams ($40 million), Sorouh said in an e-mailed statement today, beating the 52 million-dirham median estimate of three analysts (SOROUH:US) compiled by Bloomberg show.

Sorouh expects recurring income to increase it opens a mall in Al Ain in the fourth-quarter, Chief Financial Officer Richard Amos told reporters on a conference call today. It will also hand over the Al Rayyana housing project soon and expects to deliver 375 apartments in a building it bought from Tamouh, another Abu Dhabi developer, he said. Six analysts recommend investors buy the shares, while five say to hold and two suggest selling, according to data compiled by Bloomberg.

“The quality of earnings continues to improve through the diversification and strengthening of revenue streams,” Managing Director Abubaker Al Khouri said in the statement.

The nation’s developers are generally paid in installments as construction progresses and receive a final sum when the property is handed over to the buyer. Sorouh’s costs fell 53 percent to 532 million dirhams in the quarter, while revenue dropped 44 percent to 681 million dirhams.

Home Deliveries

The developer plans to deliver 9,300 housing units this year and in 2013, including 2,300 in projects for U.A.E. nationals.

Shares of the company have advanced 24 percent this year, compared with a 4.3 percent gain in the benchmark ADX General Index. (ADSMI) Sorouh and Aldar, Abu Dhabi’s biggest developer by market value, are exploring a merger with the support of the government, which owns stakes in both developers. The companies said in June the due diligence process would take months.

Sorouh, which spent 1.5 billion dirhams on projects in the three months ended June 30, has 2.35 billion dirhams of debt maturing in 2014, data compiled by Bloomberg show. The company has 1 billion dirhams of cash and has no need to raise funds this year, Amos said.

To contact the reporter on this story: Zainab Fattah in Dubai at zfattah@bloomberg.net

To contact the editor responsible for this story: Andrew Blackman at ablackman@bloomberg.net


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