Monday 07, May 2018 by Jessica Combes

SHUAA Capital maintains profitable trajectory amid expansion activities


SHUAA Capital has announced its Q1 2018 financial results, with the firm maintaining profitability. 

While Group total revenues increased slightly by four per cent to settle at AED 33.2 million, up from AED 31.8 million at the same time last year, profits retreated to the AED 11.7 million mark, primarily because of lower interest income from its lending arm, as a result of aggressive de-leveraging in bank debt in SHUAA’s lending subsidiary Gulf Finance Corporation.  

Year-on-year bank debt has reduced by AED 159 million to AED 87 million and with term debt due to be fully re-paid during Q2 2018, demonstrating strong operating cash flows. During the quarter, SHUAA had also invested in growing the business, particularly its Capital Markets division including the brokerage presence in the UAEand Egypt.  

The quarter saw SHUAA’s Asset Manage ment unit recording AED 8.9 million in revenues, an increase of 56 per cent, with the division’s profits up 204 per cent to reach AED 4.1 million. The unit, which manages and identifies the development of prime real estate opportunities in both the Kingdom of Saudi Arabia and the United Arab Emirates, is in the process of completing construction of a third project in Saudi Arabia in the city of Dammam. The division had also initiated construction works on a new mixed-use residential compound in Riyadh known as ‘Wadi Al Hada’ worth approximately the SR 1.4 billion, with works on the AED 1.7 billion ‘Dubawi’ project adjacent to Sheikh Zayed road set to commence soon.  

The Investment Banking division’s revenues stood ground at AED 0.7 million with a loss of AED 0.6 million for the period. The division is currently working on several regional buy and sell-side advisory mandates. The Capital Markets division, having undergone a period of expansion to support the consolidation efforts with the new full-fledged brokerage business in Egypt, the integration of the newly acquired subsidiary ‘Integrated Securities’, overall investments in technology and human capital, and specifically, capital deployment towards growing the Market Making and Liquidity Provision services further, reported an increase in revenues to AED 5.1 million.  

The division recorded a loss of AED 1.7 million. SHUAA continues to be the largest and most active Market Maker and Liquidity Provision provider in the UAE, actively working with the three local exchanges, with plans to roll out this niche service across regional markets soon. The Credit division, comprising Gulf Finance Corporation UAE and its Shari’ah compliant financing sister company Gulf Finance Saudi Arabia, remained profitable at AED 2.2 million. 

The corporate division which is the central business line responsible for the Group’s client facing operations, business development and principal investments reported profits of AED 7.7 million. With the Group investing in growing its various teams including investments in enhancing its regional Capital Markets’ technological infrastructure to accommodate network expansion from the UAE to Egypt and soon Kuwait, the Group’s General and Administrative expenses increased to AED 27.7 million. 

As of 31 March 2018, SHUAA’s balance sheet and total assets was AED 1.3 billion. Net assets stood at AED 869.2 million and the Group’s liquidity position was healthy with AED 94.1 million in cash and cash equivalents. SHUAA’s Bank Debt-to-equity ratio fell to just 10 per cent providing leverage opportunities.



Features & Analyses