Financial Analysis of Dubai Financial Market Companies - FIN323

This report presents a financial analysis of three prominent UAE-listed companies: Air Arabia, Aramex, and Emaar. The analysis begins with background information on each company, followed by the computation of their beta coefficients using monthly stock return data from January 1, 2010, to August 31, 2018, and the FTSE UAE Index (WIUAE.L) as a benchmark. The report interprets these beta values to assess the companies' market stability and volatility. The findings indicate that Emaar Company exhibits the most stable beta, while Air Arabia demonstrates higher instability. Based on these results, the report offers tailored investment advice to portfolio managers and investors, recommending diversified portfolio strategies based on risk tolerance and return expectations. The report concludes that investors should consider investing in these companies for long-term value creation, with specific recommendations for short-term investments based on company performance.

Financial analysis
Name of the Student-
[DATE]
[Company name]
[Company address]

Introduction
With the changes in time and due to the sudden market changing factors, every
organization faces business risk in its business functioning. In this report, financial analysis
of the Dubai financial market has been analysed. There are three main listed companies of the
United Arab Emirates has been taken into consideration. In the first part of this report, share
price of these companies have been drawn from the available portal. The share price of these
three companies of last 10 years have been analysed to find the beta coefficient for these
three companies and find out whether these beta coefficients are stable or not. These beta
coefficient have been computed by using monthly stock return data from January 1, 2010 to
August 31, 2018. Therefore, by analysing the share price changes and return available to
shareholders due to the changes in the share price, recommendation have been prepared in the
end, whether investors should invest in these three companies or not. In this report, three
companies named, Air Arabia, Aramex and Emaar Companies have been taken into
consideration.

Background information on the selected companies
Air Arabia
It is Emirati low-cost airline Company which is having its head office in the A1
Building Sharjah Freight Center, Sharjah International Airport. This is indulged in providing
air services to its clients on domestic and international level. This company has increased its
overall revenue by average 24% since last three years Air Arabia., 2019).
Aramex Company
It is an international express, mail delivery and logistics services company based in
Dubai, United Arab Emirates. This company has several business segments and focuses on
the corporate, retail and express business area. This company was founded by Jordanian
Fadi Ghandour and Bill Kingson in 1982. It is the first Arab-based company to be listed on
the NASDAQ stock exchange. This company has increased its overall sales by 18% since last
three year and maintained high financial leverage (Easton, & Sommers, 2018).
Emaar Company
The Emaar Company is diversified real estate investment trust with a property
business portfolio of the predominantly South African assets. This company has been
indulged in operating its real estate business on international level and focused on
securitisation the assets to the investors and managed growing components of the offshore
assets in business. It is located in the United Arab Emirates. It is a public joint-stock
company, listed on the Dubai Financial Market, and has a valuation of US$9.7 billion. The
net income of the company has also increased to ZAR 8015.121 million which is 19% higher
as compared to last three year data
Beta coefficient for the three companies and interpret these values
The beta coefficient of the company shows the changes in the share price of the company as
compared to the changes in the share price value of the FTSE UAE Index (WIUAE.L). This
shows the frequency of the changes in the share price of the company with the changes in the
FTSE UAE Index (WIUAE.L) (Ehrhardt, and Brigham, 2016).

Air Arabia Company
The computation of the beta Coefficient of Air Arabia Company has been given as below
(Haxholli, 2015).
SUMMARY OUTPUT
Regression Statistics
Multiple R 0.220342932
R Square 0.048551008
Adjusted R Square 0.040487881
Standard Error 0.047196873
Observations 120
ANOVA
df SS MS F Significance F
Regression 1 0.013412854 0.013412854 6.021362125 0.015594434
Residual 118 0.262850292 0.002227545
Total 119 0.276263146
Coeffici
ents
Standard
Error t Stat P-value
Lower
95%
Upper
95%
Lower
95.0%
Upper
95.0%
Interce
pt
0.00362
8461
0.004310
102
0.84185
0412
0.40157
4621
-
0.00490
6714
0.01216
3636
-
0.00490
6714
0.01216
3636
X
Variabl
e 1
0.13386
2001
0.054551
907
2.45384
6394
0.01559
4434
0.02583
4373
0.24188
9629
0.02583
4373
0.24188
9629

- 0 . 2 5 - 0 . 2 - 0 . 1 5 - 0 . 1 - 0 . 0 5 0 0 . 0 5 0 . 1 0 . 1 5 0 . 2
-0.3
-0.2
-0.1
0
0.1
0.2
0.3
f(x) = 0.362694472530634 x + 0.000755221538905436
R² = 0.0485510078429348
FTSE
FTSE
Linear (FTSE)
FTSE
AIRA
After assessing the share price details of Air Arabia Company and making the data
analysis through the regression method, it could be inferred that company has 0.133 beta. It
shows that company will have changes in the share price by 0.133 with the 1 change in the
share price of the FTSE UAE Index (WIUAE.L). This has shown that with the changes in the
share value of the FTSE UAE Index (WIUAE.L by 1% then there will be changes in the
share price of company by .133%. This shows that company less affected by the changes in
the market factors and company is more stable in terms of the other industry rivals in the
market (Malenko, 2018).
Aramex Company
The computation of the beta Coefficient of Aramex Company has been given as below.
SUMMARY OUTPUT
Regression Statistics
Multiple R 0.12744468
R Square 0.016242146
Adjusted R Square 0.007905216
Standard Error 0.047991528
Observations 120
(Aramex Company, 2019).
ANOVA

df SS MS F Significance F
Regression 1 0.004487 0.004487106 1.948217 0.1654
Residual 118 0.271776 0.002303187
Total 119 0.276263
(Aramex Company. 2019).
Particul
ar
Coefficie
nts
Standard
Error t Stat
P-
value
Lower
95%
Upper
95%
Lower
95.0%
Upper
95.0%
Intercep
t
0.002976
424 0.004433
0.671448
019
0.503
248 -0.0058
0.0117
55 -0.0058
0.01175
5
X
Variable
1
-
0.082994
586 0.059461
-
1.395785
263
0.165
4
-
0.2007
4
0.0347
54 -0.20074
0.03475
4
-0.25 -0.2 -0.15 -0.1 -0.05 0 0.05 0.1 0.15 0.2
-0.3
-0.2
-0.1
0
0.1
0.2
0.3
0.4
f(x) = − 0.195701276875337 x − 0.0106004406925653
R² = 0.0162421464687049
FTSE
FTSE
Linear (FTSE)
ARMX
FTSE
The share price details of Aramex Company has been done to make the data analysis
through the regression method, it is found that inferred that company has negative beta of -
0.082. It shows that company will have changes in the share price by 0.082 in negative
direction with the 1 point change in the share price of the FTSE UAE Index (WIUAE.L)
(Burns, and Walker, 2015). This has shown that with the changes in the share value of the
FTSE UAE Index (WIUAE.L by 1% then there will be changes in the share price of company
by .082 points in the opposite direction This shows that company has stable market condition
and will be less affected by the changes in the share price movement of the FTTSE index
changes (Emira Funding International Company, 2019)

Emaar Company
The computation of the beta Coefficient of Emaar Company has been given as below (Prasad
Rogoff, Wei, and Kose, 2015).
SUMMARY OUTPUT
Regression Statistics
Multiple R 0.012950298
R Square 0.00016771
Adjusted R Square -0.008305445
Standard Error 0.048382026
Observations 112
ANOVA
df SS MS F Significance F
Regression 1 4.63322E-05 4.63322E-05 0.019793 0.888356
Residual 118 0.276216814 0.00234082
Total 119 0.276263146
Particul
ar
Coefficie
nts
Standard
Error t Stat
P-
value
Lower
95%
Upper
95%
Lower
95.0%
Upper
95.0%
Intercep
t
0.003938
677
0.0044186
77
0.891370
215
0.374
545
-
0.0048
1
0.0126
89 -0.00481
0.01268
9
X
Variable
1
0.005937
008
0.0421998
05
0.140688
045
0.888
356
-
0.0776
3
0.0895
04 -0.07763
0.08950
4

-0.25 -0.2 -0.15 -0.1 -0.05 0 0.05 0.1 0.15 0.2
-0.4
-0.3
-0.2
-0.1
0
0.1
0.2
0.3
0.4
f(x) = 0.0282482729518217 x − 0.0032785154767201
R² = 0.000167710224051598
FTSE
FTSE
Linear (FTSE)
EMAR
FTSE
In order to compute the beta coefficient of Emaar Company, firstly we need to use
the data analysis (Robinson, et al. 2015). The share price details and changes in the share
price since last three years, it is found that Emaar Company has beta of 0.005937 beta. It
shows that company will have changes in the share price by 0.00597with the 1 point change
in the share price of the FTSE UAE Index (WIUAE.L). It is way too fluctuation which
company will have due to the changes in market factors. This has shown that with the
changes in the share value of the FTSE UAE Index (WIUAE.L by 1% then there will be
changes in the share price of company by 0.0057 This company has maintain stable share
price movement in its beta which reflects that company is less affected by the share price
movement of the FTTSE index changes.
Beta values are stable or not
All three companies are assessed in terms of changing in the share price value of three
companies. However, in terms of three companies, the most stable company is Emaar
Company which is reflecting very low variation in its share price with the changes in the
share price of FTSE index (Sanlorenzo, et al. 2015). This company has variation in the share
price by 0.0059 points which reflects that company has very low changes in the share price
due to the marketing factors (Brigham, and Ehrhardt, 2013). In addition to this, Air Arabia
has highly unstable beta value which reflects that the share value of Air Arabia will be highly
unstable. The share price will be changed by .133 points if the share price of the FTSE index
is changed by 1 point. In case of Aramex Company, it is analysed that company has low beta
coefficient and maintaining highly stable share price value in its business. Therefore, in terms

of volatility of the beta coefficient Aramex and Emaar Company have been managing the low
beta (Yahoo finance, 2019).
Recommendation for creating portfolio
The main advice for creating the portfolio for the investors would be based on the
return and risk associated with the particular share value of company. It is advised that if
investors are more inclined towards investing in the capital which offers high return then they
should invest their capital in Air Arabia Company. But at the same time, this company will be
highly risky as it has highly volatility in the share price value. On the other hand, those
investors who want to have low risk and low return then they should invest their capital in
Emaar Company. Nonetheless, for the moderate risk taking investors they should invest their
40% capital in Emaar and 40% in Aramex. After that remaining 20% amount of capital
should be invested in highly risky Air Arabia. In addition to this, aggressive investors could
invest their capital 30% capital in Aramex company and 30% in Air Arabia. After that
remaining 40% amount of capital should be invested in highly risky Emaar Company (Zhu,
2014). The main recommendation for the investment purpose for the investors would be that
all the investors should invest their capital in these companies if they want to create value on
their investment. As these three companies are stable and getting less influenced by the
changes in the share price fluctuation in the market.
Conclusion
After assessing the details of these three companies, it could be inferred that these
three companies are more stable in market as compared to other FTSE companies. Therefore,
it could be inferred that if investors wants to invest their capital in long run then most of the
investment should be made in Aramex and Emaar Company . It is considered that investors
who wants to keep their money in short run invested in these companies then should focus on
investing more capital in Air Arabia. Now in the end, the crux of this report is that investors
should invest their capital in these three companies to create value in business.

References
Air Arabia (2019), annual report, Available from: https://www.google.com/search?
q=air+ariba&oq=air+ariba&aqs=chrome..69i57j0l5.1454j0j7&sourceid=chrome&ie=UTF-8
[Accessed on 11th April 2019].
Aramex (2019), annual report, Available from: mex-announces-record-net-profit-
231045881.html. [Accessed on 11th April 2019].
Brigham, E.F. and Ehrhardt, M.C., 2013. Financial management: Theory & practice.
Cengage Learning.
Burns, R., and Walker, J. (2015). Capital budgeting surveys: the future is now.
Duchin, R. and Sosyura, D., 2014. Safer ratios, riskier portfolios: Banks׳ response to
government aid. Journal of Financial Economics, 113(1), pp.1-28.
Easton, M., & Sommers, Z. (2018). Financial Statement Analysis & Valuation, 5e.
Ehrhardt, M .C. and Brigham, E.F., 2016. Corporate finance: A focused approach. Cengage
learning.
Emar company (2019), annual report, [online]. Available from:
https://finance.yahoo.com/quote/4220.SR/ [accessed on 23rd April 2019].
Gao, B., & Wong, T. Y. (2017). Long-Term Capital Budgeting and Incentive Mechanism.
Haxholli, B. N. (2015). Zero Based Budgeting in KCS Implementing Zero Based Budgeting
Method in Kosovo Correctional Service.
Malenko, A. (2018). Optimal dynamic capital budgeting. Available at SSRN 1710884.
Prasad, E., Rogoff, K., Wei, S.J. and Kose, M.A., 2015. Effects of financial globalization on
developing countries: some empirical evidence. In India’s and China’s Recent
Experience with Reform and Growth (pp. 201-228). Palgrave Macmillan UK.
Robinson, T. R., Henry, E., Pirie, W. L., and Broihahn, M. A. 2015. International financial
statement analysis. John Wiley & Sons.
Sanlorenzo, M., Wehner, M.R., Linos, E., Kornak, J., Kainz, W., Posch, C., Vujic, I.,
Johnston, K., Gho, D., Monico, G. and McGrath, J.T., 2015. The risk of melanoma in
airline pilots and cabin crew: a meta-analysis. JAMA dermatology, 151(1), pp.51-58.
Yahoo finance, 2019 available at on 11th april, 2019 Available from:
https://in.finance.yahoo.com/[ accessed on 23rd April 2019].
Zhu, J., 2014. Quantitative models for performance evaluation and benchmarking: data
envelopment analysis with spreadsheets (Vol. 213). Springer

Appendix
Date Close(AIRA.DU) Return FTSE UAE Index (WIUAE.L) Return
30/04/2019 1.02 21.435774
31/03/2019 0.94 -0.078431373 17.329813 -0.191547131
28/02/2019 0.948 0.008510638 20.128265 0.16148195
31/01/2019 1 0.054852321 20.178213 0.002481486
31/12/2018 1.02 0.02 20.3447 0.00825083
30/11/2018 1.02 0 18.83633 -0.074140685
31/10/2018 1.02 0 18.721451 -0.0060988
30/09/2018 0.96 -0.058823529 16.032688 -0.14361937
31/08/2018 1.01 0.052083333 15.624702 -0.025447137
31/07/2018 1.07 0.059405941 16.570364 0.060523522
30/06/2018 0.979 -0.085046729 15.403197 -0.070437016
31/05/2018 1.16 0.184882533 18.061272 0.172566448
30/04/2018 1.22 0.051724138 17.204462 -0.047439073
31/03/2018 1.14 -0.06557377 17.196814 -0.000444536
28/02/2018 1.31 0.149122807 17.913422 0.041670975
31/01/2018 1.3 -0.007633588 16.327936 -0.088508271
31/12/2017 1.24 -0.046153846 15.434456 -0.05472094
30/11/2017 1.24 0 14.87734 -0.036095603
31/10/2017 1.24 0 13.936558 -0.063235901
30/09/2017 1.14 -0.080645161 13.848961 -0.006285411
31/08/2017 1.12 -0.01754386 12.637771 -0.087457102
31/07/2017 1.06 -0.053571429 14.176817 0.121781444
30/06/2017 1.02 -0.037735849 14.642928 0.032878396
31/05/2017 1 -0.019607843 15.315712 0.045946002
30/04/2017 1.04 0.04 14.475831 -0.054837868
31/03/2017 1.06 0.019230769 14.401956 -0.005103334
28/02/2017 1.23 0.160377358 15.56607 0.080830271
31/01/2017 1.38 0.12195122 15.545984 -0.001290371
31/12/2016 1.33 -0.036231884 15.540508 -0.000352245
30/11/2016 1.27 -0.045112782 14.716148 -0.053045885
31/10/2016 1.3 0.023622047 14.514395 -0.013709634
30/09/2016 1.36 0.046153846 15.099571 0.040316941
31/08/2016 1.35 -0.007352941 15.681292 0.038525664
31/07/2016 1.45 0.074074074 15.543008 -0.008818406
30/06/2016 1.31 -0.096551724 15.473866 -0.004448431
31/05/2016 1.34 0.022900763 15.644412 0.011021551
30/04/2016 1.24 -0.074626866 15.570663 -0.004714079
31/03/2016 1.23 -0.008064516 15.423162 -0.009473007
29/02/2016 1.34 0.089430894 16.783911 0.088227628
31/01/2016 1.2 -0.104477612 16.83127 0.00282169
31/12/2015 1.36 0.133333333 16.447664 -0.022791269
30/11/2015 1.21 -0.110294118 16.793383 0.021019337
31/10/2015 1.35 0.115702479 15.789377 -0.05978581
30/09/2015 1.4 0.037037037 15.91251 0.007798471

31/08/2015 1.42 0.014285714 16.739227 0.051953903
31/07/2015 1.61 0.133802817 15.913082 -0.049353832
30/06/2015 1.62 0.00621118 15.951196 0.002395136
31/05/2015 1.61 -0.00617284 15.751093 -0.012544702
30/04/2015 1.64 0.01863354 15.550987 -0.012704261
31/03/2015 1.42 -0.134146341 14.50282 -0.06740196
28/02/2015 1.63 0.147887324 15.706479 0.082994824
31/01/2015 1.66 0.018404908 14.70449998 -0.063793993
31/12/2014 1.5 -0.096385542 14.64860231 -0.003801399
30/11/2014 1.49 -0.006666667 14.59270464 -0.003815905
31/10/2014 1.32 -0.11409396 14.53680697 -0.003830522
30/09/2014 1.37 0.037878788 14.4809093 -0.003845251
31/08/2014 1.38 0.00729927 14.42501163 -0.003860094
31/07/2014 1.39 0.007246377 14.36911396 -0.003875052
30/06/2014 1.24 -0.107913669 14.31321628 -0.003890127
31/05/2014 1.38 0.112903226 14.25731861 -0.003905319
30/04/2014 1.32 -0.043478261 14.20142094 -0.00392063
31/03/2014 1.4 0.060606061 14.14552327 -0.003936062
28/02/2014 1.55 0.107142857 14.0896256 -0.003951616
31/01/2014 1.53 -0.012903226 14.03372793 -0.003967293
31/12/2013 1.55 0.013071895 13.97783026 -0.003983095
30/11/2013 1.42 -0.083870968 13.92193259 -0.003999023
31/10/2013 1.45 0.021126761 13.86603491 -0.00401508
30/09/2013 1.37 -0.055172414 13.81013724 -0.004031266
31/08/2013 1.34 -0.02189781 13.75423957 -0.004047583
31/07/2013 1.39 0.037313433 13.6983419 -0.004064032
30/06/2013 1.07 -0.230215827 13.64244423 -0.004080616
31/05/2013 1.11 0.037383178 13.58654656 -0.004097336
30/04/2013 0.979 -0.118018018 13.53064889 -0.004114193
31/03/2013 0.775 -0.208375894 13.47475122 -0.004131189
28/02/2013 0.917 0.183225806 13.41885355 -0.004148327
31/01/2013 0.885 -0.034896401 13.36295587 -0.004165607
31/12/2012 0.835 -0.056497175 13.3070582 -0.004183032
30/11/2012 0.72 -0.137724551 13.25116053 -0.004200603
31/10/2012 0.683 -0.051388889 13.19526286 -0.004218323
30/09/2012 0.66 -0.033674963 13.13936519 -0.004236192
31/08/2012 0.659 -0.001515152 13.08346752 -0.004254214
31/07/2012 0.638 -0.031866464 13.02756985 -0.00427239
30/06/2012 0.595 -0.067398119 12.97167218 -0.004290721
31/05/2012 0.576 -0.031932773 12.91577451 -0.004309211
30/04/2012 0.591 0.026041667 12.85987683 -0.004327861
31/03/2012 0.716 0.211505922 12.80397916 -0.004346672
29/02/2012 0.754 0.053072626 12.74808149 -0.004365648
31/01/2012 0.652 -0.135278515 12.69218382 -0.004384791
31/12/2011 0.586 -0.101226994 12.63628615 -0.004404102
30/11/2011 0.616 0.051194539 12.58038848 -0.004423584