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Monday, September 25, 2023

UAE shareholders got some nice dividends in April as IPO boom keeps giving


DUBAI: Investors in UAE equities had a good month in April. Not only that, but these investors have done well year-to-date, with many of last year’s IPO entities paying their first dividends in the last month — just as importantly continuing to keep their stock prices high enough.

After a lapse of 2 years, developer Emaar also returned to issuing dividends. It’s sure to be a season of giving, and shareholders are also concerned about the season of taking.

Check out the numbers – DEWA is up 8.73% year-to-date, while Emaar Properties shares have soared 19% (its other entity, Emaar Development, is up 26%). Shares in mortgage entity Amlak rose 30% as investors were zero in on a possible turnaround at the company, which has sizable accumulated losses to deal with.

Shares in Tecom have also bounced back, gaining 11% so far this year.

On the ADX, power drives performance, and that’s to be expected. Newly listed ADNOC Gas held onto its 44% gain, while ADNOC Drilling was up 26% so far this year. Fertiglobe is in positive territory at 11%.

Then there’s Salik, whose shares in toll operator Salik have risen 50% since going public last year and pay a 7% dividend yield.

Boost for April payments

Last month, shareholders in some of the most recent IPOs got what they paid for – Salik deposited AED491 million (6.55 fils per share) for its second-half 2022 performance.

DEWA paid AED4.77 billion for H2-22, for a total of AED9.9 billion, including a special dividend from Empower. The Empower dividend for H2-22 was AED 425 million or 4.3 fils per share, translating into a yield of over 5.2%.

ADNOC joint venture Fertiglobe released US$700 million in April based on its H2-23 figures, or AED1.45 billion for the year (60 fil per share). This works out to a dividend yield of 18%.

While Fertiglobe may be an exception, “in terms of dividends, we’ve seen steady growth from the typical 4% to 5% range and in many cases now over 7%,” said Sameer Lakhani, managing director at Global Capital Partners.

“Emaar and Emaar Development’s dividends are not only indicative of the health of the Dubai/UAE real estate market, but also of the rewards investors are getting for their exposure not only to the sector but also to the Group’s performance.

“Even more encouraging, results from companies such as Salik, ADNOC Gas, Al Ansari and Amlak point to a growing appetite for companies that generate strong cash flows as well as turnarounds.”

Recent UAE IPOs and their YTD equity returns

  1. Empower up 21%
  2. Salik up 18% (up 50% since IPO)
  3. Tecom up 11% (Dubai’s commercial real estate developer and landlord provided a clean set of Q1-23 numbers.)
  4. Adnoc Gas up 44%
  5. Adnoc Drilling withdrew 26%

What is the total dividend for 2022?

The 2022 dividends of UAE-listed companies “will increase significantly from AED 42.7 billion in 2021 to AED 52.1 billion in 2022”. “The increase reflects a combination of factors including new listings and higher spending compared to last year,” said Junaid Ansari, director of investment strategy and research at Kamco Invest.

DFM is the second-largest regional market (up 6.7 percent) so far this year after Saudi Tadawul (up 8.7 percent), according to Kamco Invest. In DFM, the strategy of Dubai government-owned companies to enter the market on a regular basis in 2022 has resulted in the addition of greater liquidity and attracted new retail investors.

DFM has attracted 167,332 new investors by 2022, many of them directly linked to subscriptions they may open for DEWA, ​​Salik or Tecom IPOs.

Investors are now bracing for the announcement of the price of the latest UAE IPO (from ADNOC Logistics & Services), with subscriptions opening on Tuesday. The broader ADX index is down 5.6% year-to-date, which is where new IPOs could provide a timely boost.

best performing industry

“In terms of year-to-date returns, the real estate index is the best performing sub-index on DFM and the third best performing sub-index on ADX,” Ansari said. “Consumer discretionary and consumer staples are the best performers on the ADX.

“In terms of losers, the ADX industrials and healthcare indexes posted double-digit losses.”


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