An Abu Dhabi-based investment holding company is leaving traders and investors scratching their heads after a 2,819 per cent surge in its stock in the past 12 months, with very low trading volumes.
International Holdings (IHC), which derived most of its revenue in 2019 from fish farming in the United Arab Emirates, has reached a market value of $14 billion, up from about $133 million a year ago. The steep rally in its shares hasn’t been dented by this year’s global equity market meltdown sparked by the coronavirus pandemic, or the collapse in oil prices which roiled West Asian markets. The company’s shares are up 351 per cent in 2020.
The uninterrupted surge has made it the best performing stock worldwide in the past 12 months among companies worth $1 billion or more, and IHC is now the fifth-biggest listed group in the UAE by market value, after Emirates Telecom Group, First Abu Dhabi Bank , Emirates NBD, and DP World.
The stellar rise in the shares is not easy to explain: At the end of last year, the company had total assets of only about $1.1 billion, with net profit for the year at $138 million, according to its annual report. It has been on a buying spree since the start of 2019, although none of the acquisitions had big price tags.
PAL Cooling Holding features among its biggest purchases, after IHC issued new shares worth about $357 million to pay for the firm.
The stock advanced 9.2 per cent to 27.96 dirhams in Abu Dhabi on Monday, while the local gauge rose less than 0.1 per cent.
Despite the sharp rise in the shares over the past year, trading volumes have been extremely low. In the past 12 months as of May 10, there were 9,585 different trades on the stock, an average of 30.9 per day.
On April 13, the day with the highest volume of shares this year, twelve different big block trades were settled at 17.24 dirhams ($4.69), a 15 per cent increase from the previous close.