Burj Khalifa developer shares head skyward

What's Up:Emaar Properties has disappointed since the financial crisis began, but an exceptionally strong quarter for Dubai's malls and hotels has left analysts singing the company's praises.

Emaar has risen 15.9 per cent since the start of the year. Jaime Puebla / The National Newspaper

Emaar Properties' stock is bouncing back.

The developer of the Burj Khalifa, often viewed as a bellwether for the Dubai economy, given its exposure to the retail, hotels and property sectors, has risen 15.9 per cent since the start of the year. Now analysts are starting to take notice.

Large numbers of "winter sun" travellers to the Middle East ditched Egypt for Dubai, flooding the emirate's hotels and retail outlets.

That gave the developer profits of Dh716 million during the fourth quarter, a 161 per cent increase on a year earlier.

Beltone Financial upgraded the company to "add", as it saw Emaar's exposure to Dubai's troubled market proving less of a deadweight on earnings.

A shift in focus away from development and into hotels also helped Emaar boost quarterly revenue from its hotels portfolio by 22 per cent compared with a year earlier, according to JPMorgan. Emaar had reported "a robust set of 4Q earnings driven by strong operating margin," analysts wrote in a research report.

The developer is also trading at a 43 per cent discount to its book value, JPMorgan notes.

That is a frequently heard point concerning most property developers nowadays, but recent performance is encouraging.

Emaar Properties has outperformed the DFM since the market bottomed on January 16, and if Dubai's recent bull run has further to travel, that figure looks appealing.

"No dividend may take some of the sheen from stock performance tomorrow, but we expect limited downside, if at all, given strong earnings delivery," JPMorgan's report said.

The report added that last year's dividend was not announced until a month after earnings were released, so there may be hope yet for yield-hungry investors.

However, analysts from NBK Capital wrote in a research report that some cause for scepticism remains.

"These are clearly strong results, although it should be noted that the deviation mainly comes from development sales, an extremely volatile, low-visibility segment, and that gross margins look suspiciously high," the report said.

"We do have some doubts about the quality of the underlying property development results."