Dubai Autodrome ‘pricing’ ups UP valuation

AED400 mn offered for 40% of UP subsidiary

DUBAI/September 24: Union Properties (UP) should be ideally worth a lot more than its market value (market cap) of only AED1.287 billion, if the AED400 million it claims to have been offered for a 40 per cent stake in one of its subsidiaries, is any indication to the value of subsidiaries it holds in its books.

A statement issued by the company on Wednesday stated that it has been offered AED400 million to buy 40 per cent stake in Dubai Autodrome, one of its score of subsidiaries and associate companies based in the UAE and Saudi Arabia.

The offer price obviously puts a price tag of AED1billion to Dubai Autodrome, one of its most high profile subsidiaries.

“The offer received to buy a stake in Dubai Autodrome reaffirms the strong position of Union Properties and reflects the growing value of our high-quality assets,” said the chairman of Union Properties, Khalifa Hasan Ali Saleh Al Hammadi.

The UP shares closed at 30 fils on Dubai Financial Market (DFM) on Wednesday putting the company with a share capital of AED4.289 billion at a market value of just AED1.287 billion.

UP share traded at half its book value

The UP’s closing price (on Wednesday) of 30 fils is half the book value of the company’s share at about 60 fils. UP has been going through a tough period for some time now, with the market downturn that has been further accentuated by the COVID 19, handing out more financial worries.

The property major reported a loss of AED38.56 million for the three-month-period ending June 30, 2020 against a much larger loss of AED84.07 million a year earlier.

At the same time the auditors of the company raised serious doubts about the level of loss the company reported for the financial year 2019, hinting at a much larger loss.

Large loans have always been a worry for the company. Out of a total bank loan of AED1.490 billion as of June end, 2020, AED981.024 million is current portion.

As of June 30, 2020, the two loans that have been classified as current liabilities at year end 2019 due to breach in contractual payments continue to be classified as current liabilities. The company said that subsequent to June 30, 2020, the Group is in advanced discussion with the bank to rectify the breach.

Union Properties has a number of subsidiary companies with added value in vital sectors that help achieve sustainable growth. “As announced, we are in the process of converting a number of these into private joint stock companies,” the chairman said.

 

 

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