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UDC Revised
UDC Revised
Introduction.................................................................................................................................................1
Performance Analysis..................................................................................................................................1
Profitability..............................................................................................................................................1
Liquidity Ratios.......................................................................................................................................3
Solvency Ratios.......................................................................................................................................4
Activity Ratio..........................................................................................................................................5
Conclusion and Recommendations..............................................................................................................6
Corporate Reporting....................................................................................................................................7
References.................................................................................................................................................10
Appendix...................................................................................................................................................11
Introduction
The study aims to evaluate and check that will the investor invest in the United Development
Company’s (UDC) stock. For evaluation of the financial performance of the UDC, the ratio
analysis is being used to check the profitability, liquidity, activity, and leverage of the company.
It is a public shareholding company in Qatar that has leadership in the construction industry. It is
engaged in different sectors of the industry and has different subsidiaries operating in the
segments of infrastructure and utilities, leisure and hospitality, energy and hydrocarbon, and
construction and real-estate development (UDC, 2021).
It reports the revenue of QAR 1175.69 million in 2020 and is registered in the Qatar Stock
Exchange and has the ticker of UDCD. As of April 27, 2021, in Qatar stock, the stock of the
UDC closes on QAR 1.619. in April, the stock shows a 5.88% change. In the year 2020, they got
honored with Best Residential Property Award, Best New Hotel Construction & Design Award,
and Best Mixed-Use Architecture Award from Arabian Property Awards. Despite this, they also
got different certificates. In their business model, they focused on synergistic growth and a
diversified business portfolio for getting sustainable earnings. The main competitors of the UDC
are Ezdan Holdings, Msheireb Properties, and Qatari Diar. For the comparison of the financial
performance of the UDC, we used Ezdan Holdings (UDC, 2021).
Performance Analysis
Profitability
The main function of the business is to capture the customers for earning the value for business
and without the customer, there is no business. And form customer’s business earns revenue and
profits and without profit, there is no further investment and innovations. 2020 was a heavier
year for the business around the globe as it records economic recession, and it brings all the
economic activities down for each business. Whether the business is small or has a huge market
share and strong reserves each business faces massive cuts in its revenues. The economic
conditions put a lot of load on the revenue of the UDC. The revenue from UDC records cut by
around 33.20%.
Revenue
UDC Ezdan
20.00%
10.00% 8.14%
-0.36%
0.00%
2020 2019 2018
-10.18%
-10.00%
-15.91%
-19.91%
-20.00%
-30.00% -33.20%
-40.00%
Figure 1 Revenue
UDC was suffering enough revenue decline since 2018 due to the trade cut of the four Arab
countries Egypt, Bahrain, United Arab Emirates, and Saudi Arabia in June 2017. This brings the
continued impact on 2018 when UDC get a 19.91% cut in its growth after that it got growth in
2019. On the other hand, Ezdan shows steady growth before COVID and in COVID-19 it gets a
lesser cut in its growth.
No. Profitability 2020 2019 2018
1 Revenue
UDC -33.20% 8.14% -19.91%
Ezdan -10.18% -0.36% -15.91%
2 Operating Profit
UDC -44.00% 2.32% -27.26%
Ezdan -20.48% 40.47% -19.13%
3 Net Profit
UDC -46.60% -15.48% -6.98%
Ezdan 12.50% -28.69% -74.38%
Table 1 Profitability
As in 2018 for UDC the revenue got a higher cut than the expenses that gives us the resultant
decline of 27.26% in firms operating profit, but in 2019 some of the structural changes in the
business along with the optimization brings the rise of operating profit to 8.14%. For Ezdan with
the help of extraordinary gross profit of 94.72% got less decline of 15.91 in 2018 as gross profit
rose to 96.6% in 2019 Ezdan record gross profit margin double than the UDC’s gross profit
margin of 46%. All the data shows that Ezdan shows higher performance than UDC.
Liquidity Ratios
Current Ratio
UDC Ezdan
2.00
1.77
1.80
1.60 1.50
1.38
1.40
1.20 1.07
1.00
0.80
0.60
0.40
0.20 0.17 0.15
0.08 0.05
0.00
2020 2019 2018 2017
0.10 0.10
0.09
0.08
0.06
0.06
0.04 0.04
0.03 0.03 0.03
0.02
-
1 2 3 4
Perspective. https://cfoperspective.com/how-does-value-creation-lead-to-business-
success
https://doi.org/10.1108/ijshe.2010.24911dag.001
Borad, S. B. (2019, February 9). Capital Structure and its Theories. EFinanceManagement.com.
https://efinancemanagement.com/financial-leverage/capital-structure-and-its-theories
https://gpcanada.org/corporate-reporting
https://www.investopedia.com/ask/answers/052515/what-debt-equity-ratio-common-
bank.asp#:~:text=The%20D%2FE%20ratio%20is
PWC. (2007). Corporate reporting -a time for reflection A survey of the Fortune Global 500
services/pdf/reflection.pdf
https://doi.org/https://www.udcqatar.com/-/media/26B96D05155141078E64937D45086F
53.ashx
Appendix