EMAAR Properties - Company Profile

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Information about EMAAR Properties - Company Profile
Investor Relations

Published on February 27, 2014

Author: ImranAlmaleh

Source: slideshare.net

Description

UAE's Leading real-estate developers, EMAAR Properties PJSC profile and investment prospects

Company Profile By Imran Almaleh CFA LII Candidate BSBA Finance & Banking

EMAAR Properties PJSC • Public Joint Stock Company (PJSC) listed on DFM, Established in 1997 with a capital of AED 1 bn. • Emaar Properties is currently the region's largest land and real estate developer. • In 2007, the government of Dubai, through the Investment Corporation of Dubai, took a 32% equity stake in Emaar by exchanging land for 28 billion AED worth of stock. • Activities: – – – – 2/24/2014 property investment and development property management services education, healthcare, retail and hospitality sectors investing in financial service providers EMAAR Profile - By Imran Almaleh 2

EMAAR Properties PJSC Revenue Structure (as of 9 month ending Sep-2013) International , 11% Hospitality , 13.99% Domestic , 89% Leasing and related activities , 30.36% Real estate , 55.65% Total Revenue (‘000) AED 7,565,784 2/24/2014 EMAAR Profile - By Imran Almaleh 3

Financial Summery Standard P&L (AED mn) 2009 2010 2011 2012 2013E 2014E 2015E 2016E 8,413.3 12,150.3 8,112.3 8,239.9 8,252.4 10,420.5 12,429.7 15,519.7 44.42% -33.23% 1.57% 0.15% 26.27% 19.28% 24.86% 4,048.1 3,290.9 3,336.0 3,416.2 3,979.2 4,756.6 5,584.0 26.89% -18.70% 1.37% 2.41% 16.48% 19.53% 17.40% 37.92% 33.32% 40.57% 40.49% 41.40% 38.19% 38.27% 35.98% Depreciation (635.7) (804.6) (762.5) (767.2) (755.0) (753.2) (749.7) (872.0) Operating income (EBIT) 2,554.6 3,243.5 2,528.5 2,568.7 2,661.2 3,226.0 4,006.9 4,712.0 26.97% -22.05% 1.59% 3.60% 21.22% 24.21% 17.60% 30.36% 26.69% 31.17% 31.17% 32.25% 30.96% 32.24% 30.36% 139.0 (90.0) (169.9) (361.0) (379.0) (200.1) 51.6 226.8 2,159.2 2,723.0 2,127.3 2,111.2 2,356.5 3,187.7 4,158.7 5,142.4 80.4% 0.1% (2.6%) 0.2% 0.3% 0.3% 0.3% 0.3% (1,736.9) (1.6) 54.7 (4.2) (6.7) (8.8) (11.8) (14.4) 37.9 (28.8) (124.0) 12.2 13.6 18.4 24.0 29.7 2,089.2 2,448.2 1,793.9 2,119.1 2,363.5 3,197.2 4,170.8 5,157.6 17.18% -26.72% 18.13% 11.53% 35.28% 30.45% 23.66% 24.83% 20.15% 22.11% 25.72% 28.64% 30.68% 33.56% 33.23% 0.08 0.44 0.34 0.35 0.39 0.52 0.68 0.85 Sales %Growth EBITDA 3,190.3 %Growth %Margin %Growth %Margin Net interest income/(expense) Pre-tax profit Effective tax rate Provision for income taxes Minorities Net income (post-exceptionals) %Growth %Margin EPS (AED) Key Financial Ratios Total Debt Minority Interest Equity Total Capitalization 2/24/2014 2013E 11,059.7 271.8 34,288.3 45,619.8 Total Debt/Capital Total Debt/EBITDA ROE Debt/Equity EMAAR Profile - By Imran Almaleh 24.24% 3.24 6.89% 32.25% 4

Current Trading Statistics Stock Price Premium/(Discount) to 24-2-2014 52 Week High 52 Week Low 52 Week Average 8.77 (3.9%) 74.0% 23.8% 6,317 9.13 5.04 7.09 Number of Shares Outstanding (mn) Total Equity Value (mn) Plus: Total Debt Less: Cash Total Enterprise Value AED 55,400 AED 12,055 (AED 7,770) AED 59,685 Total Enterprise Value as a Multiple of: Net Revenue 2013E 2014F 2015F Amount (AED, mn) 8252.44 10420.50 12429.71 Multiple 7.2X 5.7X 4.8X EBITDA 2013E 2014F 2015F 3416.23 3979.24 4756.58 17.5X 15.0X 12.5X EBIT 2013E 2014F 2015F 2661.21 3226.00 4006.88 22.4X 18.5X 14.9X 2013E 2014F 2015F 0.39 0.52 0.68 22.6X 16.7X 12.8X Current Share Price as a Multiple of: EPS 2/24/2014 EMAAR Profile - By Imran Almaleh 5

EMAAR Stock Performance Trade Value YTD Change % 2/24/2014 937 150,869,564 14.79% Price Previous Change % Volume EMAAR Profile - By Imran Almaleh 8.77 8.85 -0.90% 17,347,972 6

1 Year Relative Historical Performance 2/24/2014 EMAAR Profile - By Imran Almaleh 7

5 Years Relative Historical Performance 2/24/2014 EMAAR Profile - By Imran Almaleh 8

Analysis of Shares Traded (1 Year) % Traded Volume 55.82% 19.09% 14.84% 9.78% 0.48% <= 5.07 5.08 - 6.04 6.05 - 7.01 7.02 - 7.98 7.99 - 8.95 Price Range 2/24/2014 EMAAR Profile - By Imran Almaleh 9

Forward PE ratio 22.6X PE EMAAR PE 16.7X 12.8X 8.0X 8.7X 2011 10.4X 9.2X 2010 12.7X 2012 2013E 2014E 2015E 2016E 2017E Dubai Financial Market* PE ratio Current P/E Ratio 89.63 Estimated P/E (12/2014) 52.29 * We used the DFM stock as an approximation for the market index 2/24/2014 EMAAR Profile - By Imran Almaleh 10

VALUATION CONSIDERATIONS

Summery of EMAAR Reference range Methodology 9.2 52 weeks High - Low 5 9.2 11.4 PE Multiple EBIT Multiple 26.7 15.2 EBITDA Multiple 15.6 Revineu Multiple 22.8 7.7 17.7 DCF - Perpetual Growth 11.6 DCF - EBITDA Multiple 11.8 Estimate 12 4.00 15.7 6.00 13.7 14.8 16 8.00 10.00 12.00 14.00 16.00 18.00 20.00 22.00 24.00 26.00 28.00 Current Stock Price 2/24/2014 EMAAR Profile - By Imran Almaleh 12

Analysis of Selected Comparable firms Stock Price as a Multiple of Enterprise Value as a Multiple of Equity Enterprise Revenue EBITDA EBIT Earnings per Share Value Value 2012A 2013E 2014P 2012A 2013E 2014P 2012A 2013E 2014P 2012A 2013E 2014P Arabtec 15,132 20,346 3.6X 2.1X 52.6X 32.6X 23.7X 188.4X 58.1X 38.0X 68.9X 43.8X 32.1X Deyaar 7,685 9,741 17.6X 13.5X 12.8X 97.4X 34.1X 62.4X 103.7X 34.4X 64.1X Drake & Skull Industries 3,953 7,334 2.2X 1.5X 1.3X 37.0X 39.0X 18.9X 62.2X 39.0X 24.3X 43.3X 24.7X 19.2X Union Properties 7,003 13,306 8.1X 3.0X 5.9X 113.7X 81.1X 71.5X 135.4X 88.7X 44.5X 41.6X EMAAR 57,594 63,397 7.7X 6.1X 6.3X 20.7X 18.6X 17.7X 27.6X 23.4X 22.3X 26.0X 21.7X 22.2X 17.6X 13.5X 12.8X 113.7X 81.1X 71.5X 188.4X 88.7X 64.1X 68.9X 44.3X 66.5X AVERAGE 7.9X 5.2X 5.5X 75.2X 46.7X 44.1X 122.4X 55.1X 42.7X 51.2X 29.3X 42.5X MEDIAN 5.8X 2.9X 4.0X 75.0X 36.5X 43.1X 119.6X 48.6X 41.2X 43.3X 34.3X 42.1X LOW 2.2X 1.5X 1.3X 37.0X 32.6X 18.9X 62.2X 34.4X 24.3X 41.6X Company HIGH 2/24/2014 2.9X EMAAR Profile - By Imran Almaleh N/A 44.3X 66.5X 4.4X 4.4X 13 52.0X 19.2X

Analysis of Selected Comparable firms Shares Outstanding Statistic Revenue LTM 2013 2014P 8,240 10,328 9,992 6,317 Multiple Range 7.0X 5.0X 5.5X 15.0X 12.5X 10.0X Net Debt 5,803 Implied Enterprise Value 57,679 123,599 51,640 129,100 54,956 99,920 Implied Equity Value Implied Price Per Share 51,876 117,796 45,837 123,297 49,153 94,117 8.21 7.26 7.78 18.65 19.52 14.90 7.75 17.69 17.95 10.44 23.31 23.34 21.80 15.62 22.82 21.65 13.84 10.01 42.50 19.91 17.61 15.17 26.67 14.00 12.31 8.00 15.16 14.41 17.43 11.43 15.66 Range EBITDA LTM 2013 2014P 3,061 3,406 3,588 40.0X 35.0X 20.0X 50.0X 45.0X 40.0X 122,440 153,050 119,210 153,270 71,760 143,520 116,637 18.46 147,247 113,407 147,467 65,957 137,717 Range EBIT LTM 2013 2014P 2,294 2,709 2,841 62.2X 34.4X 24.3X 119.6X 48.6X 41.2X 142,586 274,248 93,249 131,584 69,036 117,049 136,783 268,445 87,446 125,780 63,233 111,246 Range Earnings per Share LTM 2013 2014P 0.35 0.42 0.41 40.0X 29.3X 19.5X 43.3X 34.3X 42.5X 5,803 5,803 5,803 94,241 83,540 56,308 88,438 95,734 77,737 91,003 50,504 110,074 Range 2/24/2014 EMAAR Profile - By Imran Almaleh

Discounted Cash-flow Analysis (AED '000,000, except per share data) 2013 Less: Cash Taxes @ Tax-effected EBIT (NOPAT) Plus: Depreciation Less: Capital expenditures Less: Change in net working capital Unlevered free cash flow 2017 5,467 4,484 (46) 7,745 6,451 (66) 11,355 9,591 (98) 17,210 14,720 (150) 4,438 6,385 9,493 14,570 755 983 1,294 1,764 2,490 (717) (678) (678) (698) (690) 2,676 (136) 1,151 (4,447) (2,535) 5,338 WACC @ 16.0% NPV of Unlevered free cash flow @ 16.0% 2016 2,624 1.02% 2015 3,406 2,651 (27) EBITDA EBIT 2014 4,607 8,153 6,113 13,834 23,189 EBITDA MULTIPLE METHOD Terminal Value EBITDA Multiple Undiscounted Low Hi 6.0x 8.0x 103,259 137,679 Implied Perpetual Growth Rate 1.69% 4.93% Discounted 56,962 75,949 80,151 74,348 11.77 DCF Range (Implied Enterprise Value) Equity Value Implied Price per Share 99,138 93,335 14.78 PERPETUITY GROWTH METHOD Terminal Value Perpetuity Growth Rate Undiscounted Discounted Implied EBITDA Multiple 1.5% 101,746 56,127 5.9x 4.0% 125,909 69,456 7.3x 79,316 73,513 11.64 DCF Range (Implied Enterprise Value) Equity Value Implied Price per Share 2/24/2014 EMAAR Profile - By Imran Almaleh 92,646 86,842 13.75

WACC Calculations Actual 2010 2011 Estimated 2012 2013 19.57% 26.13% 14.72% 19.31% Net Debt to Equity Ratio Average 16.79% Capital Structure Debt 16.18% Equity 83.82% (AED '000,000) 2010 Actual 2011 2012 Estimated 2013 Interest Expence (355) (562) (705) (746) Net Debt Outstanding 6,127 8,256 4,832 5,803 Cost of Debt 5.79% 6.81% 10.01% 14.59% 12.85% Average Tax rate 1.02% After-Tax Cost of Debt 9.91% Beta Risk free rate Equity Risk Premium Cost of Equity 1.26 2.50% 11.68% 17.22% WACC 2/24/2014 EMAAR Profile - By Imran Almaleh 16.03% 16

References • • • • • • • • 4-traders.com Aljazira Capital EMAAR initiation report 2012 Asma.info Bloomberg.com Dfm.ae EMAAR Annual, Semi-annual financial Reports Goldmen-Sachs Quantum: EMAAR (Dec-19-2013) Gulfbase.com 2/24/2014 EMAAR Profile - By Imran Almaleh 17

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