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Friday, August 27, 2021
Gulf News - Abu Dhabi's Eshraq Investments will do well with a Capital Reduction Move
Vijay Valecha, Special to Gulf News August 27, 2021
For the week ended August 26, the DFM closed higher by 2.18 per cent and ADX in a marginal decline of 0.03 percent. The top gainers are ESG Emirates Stallions (66.23 per cent), Al Mal Capital REIT (32.09 per cent), Emirates Refreshments (27.78 per cent), Manazel Real Estate (26.42 per cent), Al Qudra Holdings (22.98 per cent), and Zee Stores (7.63 per cent).
Eshraq investments was also a notable gainer for the week (9.68 per cent). The stock is at Dh0.336, almost double its all-time low of Dh0.171. The stock is still at a discount compared to its all-time high of Dh1.22.
Across the board gains
Eshraq is an investment company with an extensive portfolio of residential, hospitality and other real estate projects. It also has a diversified portfolio across equities, fixed income, private equity and debt products. With a market capitalization of Dh781.2 million, it generated Dh15.36 million in investment income in the first six months of the year, thanks to a diversification strategy involving financial and tech assets. These gained increased traction during the pandemic.
The net profit of Dh17.95 million represents a 167.25 per cent increase compared with first-half 2020, and marking a return to strong growth and profitability. There was good news for Eshraq with its leasing and hospitality businesses returning to pre-Covid levels, with those in DIFC and Nuran achieving occupancy rates of 97 and 96 per cent.
Development and handover
With the Expo 2020 around the corner, the company’s real estate portfolio is expected to receive a strong boost. The influx of tourists and professionals expected to attend is prompting more developmental initiatives.
Marina Rise, the company's first mixed-use development at Reem Island, has received its Building Completion Certificate from Abu Dhabi Municipality and has commenced leasing units. The completion is an important step towards monetizing Eshraq’s land bank and improving its bottom-line.
The board of directors believes the company is well-positioned for a capital reduction to enable a positive net reserve by eliminating accumulated losses. This will benefit shareholders as Eshraq will be able to use future profits to pay dividends. Looking ahead, the company remains committed to creating value for shareholders through improved operational efficiencies and a stronger balance-sheet.