The brokerage also lowered its 2011-2013 cumulative earnings estimates for the residential developer by 37 percent, saying funding concerns for development projects could lead to a delay in execution and hence, sales.
"We believe that a further decline in land sales would result in overstretching DAAR's balance sheet as the company would take on more debt," Credit Suisse said.
Dar Al-Arkan is not able to capture the current housing demand in Saudi Arabia as it is still too focused on high margin land plot sales, Credit Suisse said, adding it believes the land sales model is unsustainable.
The brokerage, which kept a "neutral" rating on DAAR's stock, expects land sales to drop by 23 percent year-over-year in 2011 as the market becomes more mature and the company's land bank depletes.
