Dubai builder Arabtec said in a press release on Monday that one of its units has secured a contract worth 315 million dirhams, pushing Arabtec’s stock to close higher for the day.

The press release said that Target Engineering Construction Company, a wholly owned subsidiary of Arabtec, secured an additional 315 million dirhams contract from Tecnicas Reunidas, to carry out construction works for Abu Dhabi National Oil Company (ADNOC) Onshore’s Bu-Hasa Integrated Field Development Project. Spanish contractor Tecnicas Reunidas was handed a 5.1 billion dirham contract expand production at the Bu-Hasa field in November last year.

“Today’s award underpins our assumption that Arabtec would be able to counter current industry headwinds on the back of a slowdown in construction activity in MENA by its strong ties with ADNOC and the GCC key developers,” Michel Said, a research analyst at Cairo-based CI Capital, told Zawya by email.

“Nevertheless, we note that today’s contract brings Arabtec’s year-to-date new awards to approximately AED2 billion, or 25 percent of management('s) target, partially justifying, in our view, the stock’s current valuation,” Said added.

Arabtec posted a 50 percent drop in first quarter (Q1) net profit attributable to shareholders to 31.81 million UAE dirhams in Q1 2019, from 63.63 million dirhams in Q1 2018.

Said noted that Arabtec’s stock price shed almost 22 percent of its value following the contractor’s “feeble” first quarter of the year 2019’s results.

“We believe that the drop was overdone and that one quarter’s results is not enough to wipe out all the efforts that have been made over the past couple of years, posting nine consecutive profitable quarters with a steady margin improvement,” he added.

The company’s shares gained 0.68 percent on Monday to 1.48 dirhams, but have dropped 22.11 percent so far since the start of 2019.

Hamish Tyrwhitt, the CEO who led a restructuring and recapitalisation of Arabtec in 2017, stepped down  from the company last month. Arabtec said in a filing to the Dubai Financial Market that chief financial officer Peter Pollard had been appointed as acting CEO. (Read more here)

(Reporting by Gerard Aoun; Editing by Michael Fahy)

(gerard.aoun@refinitiv.com)

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