EFG-Hermes, the leading financial services company, has upgraded Emaar Properties to neutral from reduce rating in the short-term, pointing out that the company showed better-than-expected second quarter results and hopes a stronger performance during the second half.

According to EFG-Hermes, if not for the one-time write-off of Dh.1.697 for its US subsidiary JL Homes, Emaar, the biggest property developer in Middle East, would have surely reported a solid net profit of Dh.413million, almost thrice higher than its own estimate of Dh.145million.

Emaar had reported a second quarter loss of Dh.1.284 billion.

While there was a 65 percent decline in revenue compared to that noticed a year ago, it was still 25 percent higher than that during the first quarter. Emaar’s operating profit of Dh.458million was also much ahead of the estimate by EFG-Hermes at Dh.127.1million.

Emaar also showed robust growth in rental income during the second quarter, an increase of a hefty 357 percent compared to that during a year ago at Dh.416million, which reflects a great contribution from its UAE-based rental properties, particularly the Dubai Mall.

Analysts are hoping for a further increase in revenue when it opens Burj Dubai, the world’s tallest skyscraper, before end of the year.

Pointing out to the strong balance sheet of Emaar, EFH-Hermes said that the total debt condition of the company in the second quarter decreased by Dh.1.6billion, compared to that during the previous quarter, following the write-off related to its US operations.

Although the long-term ‘neutral’ rating of Emaar has been maintained for now, but, there still remains a lack of visibility about its pending merger with the three property companies controlled by Dubai Holding.