Shares in Amlak Finance continued to defy gravity and analysts’ predictions yesterday, hitting their maximum market limit for the third day in a row.
The Islamic lender’s shares rose by 14.9 per cent in yesterday’s trading, ending the day at Dh1.54 each.
Nearly 240 million Amlak shares changed hands during the day, accounting for just under a third of the entire traded volume on the Dubai bourse.
The lender’s shares have increased in value by more than 50 per cent in the four days since they started trading again after more than six years in the wilderness, to the bemusement of market watchers.
“We think retail investors believe Amlak has to catch up with the DFM, which was at the time of [suspension] at slightly more than 2,000 and now is just below 4,000,” said Jaap Meijer, the managing director of research at Arqaam Capital.
“However, this overlooks the fundamental position of the financing company. Although the real estate investments have been fully written down, and the company has been stabilised, the tangible capital base as well as the earnings capacity remain very limited, in our view.”
Arqaam last week reinitiated coverage of Amlak stock, assigning a target price of just 30 fils a share.
“The [share] price rises don’t make any sense, valuation-wise,” said Muhammad Shabbir, the head of equity funds and portfolios at Rasmala Investment Bank in Dubai.
“There’s talk of people buying on the hope of a prospective acquisition deal for the company, but we haven’t been privy to anything.”
Such a deal, similar to the acquisition of its rival troubled lender Tamweel by Dubai Islamic Bank in 2013, was unlikely, according to Mr Meijer.
“We don’t envisage any takeover like that of Dubai Islamic acquiring Tamweel happening with Amlak,” he said.
“Tamweel was far more attractive to DIB than Amlak, as the balance sheet of Tamweel was much stronger before acquisition than that of Amlak.”
The DFM General Index, of which Amlak is not a member, ended the day down 1 per cent at 3,988.94, led by a 1.5 per cent drop by Emaar Properties and a 2.7 per cent decline by Dubai Investments.
Sentiment was similarly subdued in the capital. The Abu Dhabi Securities Exchange General Index closing down 0.7 per cent at 4,553.97.
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