Tabreed surge leads to more speculation


12/03/2012 11:42 AST  The National

A 221 per cent surge in Tabreed's stock price over the past two months has raised fears that the utilities firm is alarmingly overpriced.

Recent investor interest has left most analysts scratching their heads as Tabreed, also known as National Central Cooling Company, jumped from 49 fils at the start of January to a peak of Dh2.13 last week.

"Tabreed's recent price behaviour and demand pattern could be consistent with leakage of a potential entry of a strategic investor or of an entity vying for controlling interest," said Talal Touqan, the head of equity research at Al Ramz Securities in Abu Dhabi.

Mr Touqan said Tabreed's rally was overstated and the current market price was not justified, with shares currently trading at a premium of 46 per cent.

Several other publicly listed companies, such as Arabtec Holding, have experienced similar surges in their stock prices.

The Dubai construction company gained 128 per cent in the first two months of the year amid speculation that a strategic investor was accumulating shares in the company. Aabar Investments, an Abu Dhabi sovereign investment company with stakes in Daimler, Virgin Galactic and UniCredit, last Tuesday emerged as the latest investor in the construction giant, with a 5.28 per cent stake.

Mr Touqan initiated coverage on Tabreed with an "underweight" recommendation and a fair value price of 96 fils a share.

Tabreed, which was hurt during the Dubai property downturn in 2008, completed its recapitalisation programme early last year with the help of Mubadala Development. Mubadala, a strategic investment company owned by the Abu Dhabi Government, offered the long-term capital which included Dh1.7 billion in mandatory convertible bonds that mature in March 2019, as well as a subordinated loan facility of up to Dh1.4bn, which includes a payment in kind component that converts into shares upon maturity.

Given these conditions, current shares outstanding could increase by as much as five times to 3.5 billion shares in 2019.

"With the number of shares astronomically multiplied, earnings as well as book value would be diluted," Mr Touqan said.

While most stocks rose on the Dubai Financial Market yesterday, Tabreed fell as much as 9 per cent during the trading session but closed 3.7 per cent higher to Dh1.68.

National Central Cooling Co. - TABREED
2014 | 2013 | 2012 | 2011 | 2010 | 2009 | 2008 | 2007 | News Archive

JAN | FEB | MAR | APR | MAY | JUN | JUL | AUG | SEP | OCT
Most Viewed Companies
Ticker Price Volume
SPIMACO 45.86 428,866
EMAAR 10.3 11,369,691
ALKHODARI 65.92 4,110,576
RIBL 20.14 1,028,811
SABIC 115.42 6,037,734
SORAYAI 21.59 654,998
SECO 17.47 3,186,647
Recent News

Sabic-Shell scrap Jubail plant plan
Saudi Basic Industries Corporation (Sabic) and Royal Dutch Shell have shelved plans to expand an existing petrochemical joint venture in Saudi Arabia as the results of feasibility studies were not en

Petchem delegates explore sustainability challenges
GCC petrochemical companies are being urged to educate their staff to enable them to work around sustainability challenges.

Energy companies embarking on conservation efforts will benefit fr

Al-Tayyar Travel Group Q3 profit rises 13.5%
Saudi Arabia’s Al-Tayyar Travel Group posted a 13.5 percent rise in third-quarter net profit rise, slightly below analysts’ forecasts, as sales increased.

The company made a net profit of SR

Jarir proposes Q3 dividend of SR1.8 per share
Saudi Arabia’s Jarir Marketing Co. has proposed a third-quarter dividend of SR1.8 per share, the retailer said in a statement.

This is slightly above the dividend of SR1.67 per share the com

Al-Khodari may double capex to handle big projects
Major Saudi Arabian construction firm Abdullah Abdul Mohsin Al-Khodari and Sons says it may double its capital spending in coming years to cope with the work it hopes to do on the country’s big infra

GulfBase GCC Index
Search By
  • Company Symbol
  • Company Name
  • Mutual Fund Name
  • News Content
Send this page to a friend

Poll

Which of the following do you think is the best long-term investment?