19 March 2019

Emaar Developments: Ain’t No Margin High Enough

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Emaar Developments is the largest listed developer on the Dubai Financial Markets with a market capital of over AED 15 billion. Given the market correction that has transpired in the DFM since hitting its peak in 2014, valuations have compressed, leading to Emaar Developments currently trading at a price to earnings ratio of 3.9, which is half of similar companies in other parts of the world (UK, US and China). This valuation disparity, despite comparable gross margins illustrates considerable upside potential from current levels.

Emaar’s continued success in maintaining gross margins whilst exceeding sales expectations, attests to not only the vibrancy and latency of the demand inherent in the property market, but also affirms its superior prowess in executing projects that exceed the expectations of investors/end users.

Given its stellar track record, alongside structural macro-economic reforms that have been implemented by the government, we opine that the company will continue its path of superior profitability, implying considerable upside potential that the market is currently not factoring in.

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