Aramex shares up more than 50% this year

Shares in Aramex jumped more than 50 per cent this year, making it one of the strongest performing equities in the UAE at a time when the broader market has declined.

The express courier’s stock was at Dh2.23 yesterday, just under a 27-month high. Its gains have come as Dubai’s broader index fell 6.6 per cent over the same period.

Aramex was founded in Jordan in 1982 and has grown into a multi-service provider offering express delivery, freight forwarding, logistics and warehousing, consumer retail services and e-commerce solutions.

The company operates throughout the Gulf, Europe, Asia and the US, with more than 8,000 employees. Its first-half performance delivered Dh102.5 million (US$27.9m) in net profits.

“The company has been delivering growth to the bottom line, is well managed and its performance has been excellent,” said Kareem Murad, an analyst at Shuaa Capital. “It is one of the favourite picks for foreigners.”

General trading on the stock has been thin, suggesting many investors are in a “buy and hold” mode. With the value of outstanding shares totalling Dh1.3 billion, only between Dh8m and Dh10m are traded daily, Mr Murad said.

“Thin volumes are one of the factors contributing to momentum on shares,” he said.

Some analysts have suggested investors expect Aramex to become a takeover target if the Federal Government were to proceed with plans to raise foreign ownership limits under a proposed companies law.

“There are rumours referring to some old media reports that TNT may be interested in acquiring Aramex,” said Julian Bruce, the director of institutional equity sales at EFG-Hermes. “The stock is solely driven by local investors who are speculating on this possibility.”

Underscoring the growth potential of the UAE logistics sector, FedEx yesterday announced its plans to expand its business in a move that could challenge Aramex’s strong market position.

The US-based company said it would create a “next business day” domestic express service to complement its existing international express after similar moves in India, UK, China, Mexico and Switzerland.

igale@thenational.ae
* with Reuters