Marmore Company Reports. Emaar Properties PJSC. subsidiary

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1 Marmore Company Reports Emaar Properties PJSC Country Sector UE Real Estate

2 MRMORE COMPNY REPORTS Research Team M.R. Raghu CF, FRM Head of Research N.C. Karthik Ramesh Manager Research Rakesh Khanna Research nalyst Support Team Jenevivu Lasrado Executive Secretary, Research Disclaimer This report has been prepared and issued by Marmore MEN Intelligence Ltd (Marmore), a fully owned research of Kuwait Financial Centre Markaz K.P.S.C. Marmore is a private limited company registered with the Registrar of Companies in India. This Report is owned by Marmore and is privileged and proprietary and is subject to copyrights. Sale of any copies of this Report is strictly prohibited. This Report cannot be quoted without the prior written consent of Marmore. ny user after obtaining Marmore's permission to use this Report must clearly mention the source as Marmore." The Report is intended to be circulated for general information only and should not to be construed as an offer to buy or sell or a solicitation of an offer to buy or sell any financial instruments or to participate in any particular trading strategy in any jurisdiction. The information and statistical data herein have been obtained from sources we believe to be reliable, but no representation or warranty, expressed or implied, is made that such information and data is accurate or complete, and therefore should not be relied upon as such. Opinions, interpretations, estimates, and projections in this report constitute the current judgment of the author as of the date of this Report. They do not necessarily reflect the opinion of Markaz or Marmore or other identified parties and are subject to change without prior notice. Neither Marmore nor Markaz have an obligation to update, modify, or amend this report or to otherwise notify a reader thereof in the event that any matter stated herein, or any opinion, projection, forecast, or estimate set forth herein, changes or subsequently becomes inaccurate, or if research on the subject company is withdrawn. This Report may not consider the specific investment objectives, financial situation, and the particular needs of any specific person who may receive this report. Investors are urged to seek financial advice regarding the appropriateness of investing in any security or investment strategy discussed or recommended in this report and to understand that statements regarding future prospects may not be realized. Investors should note that income from such securities, if any, may fluctuate and that each security s price or value may rise or fall. Investors should be able and willing to accept a total or partial loss of their investment. ccordingly, investors may receive back less than originally invested. Past performance is not necessarily indicative of future performance. Markaz may seek to do business, including investment banking deals, with companies covered in its research reports. Markaz may have interests in the areas covered in this research report. Markaz, Markaz managed entities, its clients, or its employees may have from time to time long or short positions in any security, derivative or other types of assets referred to in this research report. s a result, investors should be aware that Markaz may have a conflict of interest that could affect the objectivity of this report. This report may provide the addresses of or contain hyperlinks to websites. Except to the extent to which the report refers to website material of Markaz and Marmore, Markaz has not reviewed the linked site and takes no responsibility for the content contained therein. Such address or hyperlink (including addresses or hyperlinks to Markaz s or Marmore s own website material) is provided solely for your convenience and information, and the content of the linked site does not in any way form part of this document. ccessing such website or following such link through this report or Markaz s or Marmore s website shall be at your own risk. For further information, please contact Markaz at P.O. Box 23444, Safat 13095, Kuwait; info@e-marmore.com; Tel: ; Fax:

3 Table of contents MRMORE COMPNY REPORTS 1. Executive Summary Business Overview... 9 Overview... 9 Geographical Segmentation...15 Property Development in UE...18 Porter five force analysis...19 STEEPLED analysis Financial Overview...30 Revenue...30 Revenue Breakup...31 Key Financial Ratios...33 Cost Structure...33 Selling and dministrative Expenses...35 Operating Profit Margin...37 Net Profit...38 Balance Sheet Strength...39 DuPont nalysis...40 Earnings Quality (EQ) Projections Peer nalysis...48 Regional Peers...48 Global Peers Share Market Overview

4 MRMORE COMPNY REPORTS Risk Metrics...53 Liquidity ppendix...58 Growth Drivers...58 Dubai Expo Management Compensation

5 MRMORE COMPNY REPORTS Tables and Charts Tables Charts 1.1 Summary 2.1 Shareholding of Emaar Properties 1.2 Business View 2.2 Emaar Properties Timeline 1.3 Financial View (Long term view) 2.3 Emaar Properties major divisions 2.1 Emaar Properties and its Subsidiaries 2.4 Emaar Domestic vs International Revenues (in USD Mn) 2.2 Key Performance Indicators 2.5 Land bank by Geography (in Million Sq.m) 2.3 Real Estate Unit sales to date in Key geographical markets (ex-ue) 3.1 Revenues (in million USD) and Year on Year Revenue Growth (in %) 2.4 Property Development Metrics - Units 3.2 Major segment sales (USD billion) completed and under development 2.5 Summary of Porter s Five Forces analysis 3.3 Segment-wise breakup of Cost of Revenue in 2014 (in %) 2.6 Summary of STEEPLED analysis 3.4 Cost Structure during (in million USD) 2.7 SWOT analysis 3.5 Breakup of Selling, General and dministration Expenses in 2014 (in %) 3.1 Financial Ratios 3.6 Operating Margin during (in %) 3.2 Ro and RoE over the years 3.7 Net Profit (in million USD) and Net Profit Margin (in %) 3.3 DuPont nalysis 3.8 Total Debt during (in million USD) 3.4 Earnings Quality Components for Emaar Properties with Industry average 3.9 Capital Expenditure (in million USD) and CPEX to Revenue ratio (in %) 3.5 Earnings Quality of Emaar Properties during Emaar Properties vs Dubai Financial Market Index (Rebased to 100) during Projections for Income Statement, Balance Sheet 6.2 Emaar Properties stock performance vs Peer Group 4.2 Segment wise Revenue (Historical and Projection in USD Mn) 6.3 Risk vs. Return: Emaar Properties and Peers ( ) 5.1 Peer Group Evaluation, Trading Volume (From Jan 1, 2010 to 31st Dec, 2014) 5.2 Rankings of Closest Global Peers based on Market Cap 7.1 International Tourist rrivals in UE (in Mns) 6.1 Returns since Risk Metrics 6.3 Dividend 6.4 Key metrics 6.5 Stock Price 6.6 nalyst Calls 7.1 Board of Directors 7.2 Compensation of Key Management Personnel of Emaar Properties 7.3 Compensation of Key Management Personnel of ldar Properties 5

6 MRMORE COMPNY REPORTS 1. Executive Summary Table 1.1: Summary Emaar properties PJSC is a property developer based out of UE, having a diverse portfolio of business segments with a presence in 17 countries around the world. Market Cap USD 16Bn Sales (USD Mn) 2,694 Listings Dubai Stock Exchange Net Profit (USD mn) 1,004 % share in the index 17% Net Debt (USD mn) 3,363 Number of employees 6,600 P/E Number of countries 17 P/B 1.77 Peer group ranking 4/5 Div. Yield 1.83% Source: Thomson Reuters, Mcap, PE, PB, Div Yield as of 23 Rd pr 2015, Sales, Net Profit, Net Debt Emaar Properties is the leading property developer in the UE in terms of market capitalization Emaar properties PJSC is a property developer based out of UE, having a diverse portfolio of business segments with a presence in 17 countries around the world. It was incorporated in the year 1997 and was listed on the Dubai Financial Market in Emaar Properties has worked on major property development projects like the Burj Khalifa, Dubai Mall etc. in Dubai and also has tie-ups with local partners in several countries for their international operations. It has a strong presence in hospitality sector and has been venturing into emerging sectors like retail and ICT (Information, Communication and Technology). Dubai has transformed into a focal point for global trade with a population of more than 2 million in 2014, a figure that has nearly doubled in the past 10 years. It is expected to be more than 3 million in 2020 assuming its current CGR of 7%. Emaar Properties is the leading property developer in the UE in terms of market capitalization and currently is working on several projects to which they have committed for till

7 MRMORE COMPNY REPORTS Table 1.2: Business View Ratings The demand for affordable housing is rising in the UE as property prices have shot up to high levels. Sector ttractiveness High Business Model ttractiveness Medium Industry Competitiveness High STEEPLED nalysis Good Source: Marmore nalysis The construction sector remains highly attractive to investors as there is a huge need for housing in the UE as well as the wider MEN region. The demand for affordable housing is rising in the UE as property prices have shot up to high levels creating mismatch between the prices of the housing properties and average salaries. Government of UE has shown keen interest on diversifying the economy by investing heavily in tourism related activities and on Expo 2020, both of which are expected to create more jobs and result in higher demand for housing in the country. Emaar s Emaar s business model is similar to what the other construction companies in the region provide and it does not differentiate itself much from the competitors. business model is similar to what the other construction companies in the region provide and it does not differentiate itself much from the competitors. Real estate market is highly competitive in UE given the lack of vast swathes of land. Bidding for projects is very fierce and there exists high levels of competition to launch big ticket projects, especially during high profile events such as Cityscape. The factors analyzed in the STEEPLED segment points to be favorable for the real estate segment in the UE. Table 1.3: Financial View (Long term view) Top line Growth Bottom-line Growth Margins ROE Balance sheet Strength CFO CPEX Earnings Quality Source: Marmore nalysis Ratings Moderate High High Moderate Moderate Good Good Good 7

8 MRMORE COMPNY REPORTS Revenues in 2014 declined by 4% largely influenced by the sluggish oil prices and are still below its 2010 levels. The five year period has been a period of ups and downs for Emaar properties with revenues going up in 3 and declining in 2 years. Revenues in 2014 declined by 4% largely influenced by the sluggish oil prices and are still below its 2010 levels. While the overall revenues have declined the revenues from the leasing divisions has been increasing at a CGR of 18% during In 2014, Emaar Properties saw a 14% decrease in operating expenses which led to a higher operating margin. In 2014, the D/E ratio of Emaar properties has increased to 0.37 as the company s debt increased by 23% from USD 2,725 Mn to USD 3,363 Mn during Their D/E ratio is 0.37 which is well below the industry average of The earnings quality of Emaar Properties is above the industry median which means the company is able to better the industry standards of accruals, cash flow and efficiency. Cost of the full report: $250 For payment details please write to: info@e-marmore.com Or Kindly use our online payment gateway at 8

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