UAE IPO's on the rise + RAK Properties a BUY?

Author

Marc Samouilhan
August 15, 2024

Market Pulse

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Market Smart News you need to know

  1. Dubai's Business Growth:

    • In the first half of 2024, over 7,800 Indian companies registered with the Dubai Chamber of Commerce, highlighting Dubai's growing attractiveness to international businesses. Pakistan followed with 3,968 new companies, and Egypt came in third with 2,355 new registrations.

  2. MENA IPO Market:

    • The IPO market in the Middle East and North Africa (MENA) region showed strong resilience in Q2 2024, with 14 IPOs raising a total of $2.64 billion, a 45.3% increase from the previous year. The most significant IPO was Dr. Soliman Abdul Kader Fakeeh Hospital Co in Saudi Arabia, raising $764 million. Alef Education Consultancy LLC's listing on the Abu Dhabi Securities Exchange (ADX) raised $515 million.

  3. Gold Prices:

    • Gold prices in Dubai fell on Thursday morning, with the 24K variant opening at Dh297 per gram. This decline follows a global drop of 1% in gold prices after US consumer price data showed a rebound in July.

The rise in IPOs (Initial Public Offerings) in regions like the Middle East and North Africa (MENA), particularly in the UAE and Saudi Arabia, is being driven by several key factors:

Why the IPO’s?

  1. Economic Diversification:

    • Governments in the Gulf Cooperation Council (GCC) countries, especially in the UAE and Saudi Arabia, are pushing for economic diversification to reduce dependence on oil revenues. This drive has led to more companies going public as part of broader strategies to develop their financial markets and encourage private sector growth​.

  2. Strong Market Conditions:

    • The financial markets in the MENA region have shown resilience and growth, making them attractive for IPOs. For example, despite global market volatility, the MENA region's IPO market performed strongly in the first half of 2024, with robust investor demand and liquidity supporting new listings​​.

  3. Government Initiatives:

    • Governments in the UAE and Saudi Arabia have implemented reforms and incentives to make their stock exchanges more attractive to both companies and investors. These include streamlined regulations for IPOs, enhanced transparency, and efforts to attract foreign investments​.

  4. High Investor Appetite:

    • There is a strong demand from regional and international investors looking for new investment opportunities in high-growth sectors. Sectors such as technology, education, and healthcare have seen particular interest, as seen with the recent listings of companies like Alef Education Consultancy and Dr. Soliman Abdul Kader Fakeeh Hospital Co​.

  5. Strategic Listings:

    • Companies are timing their IPOs strategically to capitalize on favorable market conditions, including high valuations and strong investor sentiment. This has been particularly evident in the UAE, where companies are choosing to list during periods of high market liquidity and optimism​.

Market Smart Pick

  • RAK Properties

    1. Revenue Growth:

      • RAK Properties reported a 19% increase in revenue for the first half of 2024, reaching AED 610 million (approximately $166 million). This growth was driven by strong sales and strategic expansion in the real estate market .

    2. Profitability:

      • The company recorded a net profit of AED 89.05 million for H1 2024, slightly up from AED 88.18 million in the same period last year. This demonstrates the company’s ability to maintain profitability despite market challenges .

    3. Market Position:

      • RAK Properties continues to strengthen its position as a key player in the Ras Al Khaimah real estate market, benefiting from the region's growing demand for residential and commercial properties .

    4. Stock Performance:

      • The stock has shown a stable performance, reflecting investor confidence in the company’s strategic growth and robust financial health .

    5. Strategic Developments:

      • The Government of Ras Al Khaimah increased its stake in RAK Properties to 34% in June 2024, signaling strong governmental support for the company's future growth initiatives .

    Overall, RAK Properties has demonstrated solid financial performance and strategic growth, making it a noteworthy stock in the UAE real estate sector.

DISCLAIMER: This information is prepared by Market Smart and uses public and reliable sources. Market Smart nor any of its directors, isn't liable for its content or use. It's not intended as investment advice or a solicitation to trade financial products.