By: Mahmoud Gamal

Dubai – Mubasher: Arabtec Holding recently announced a series of project awards to the mother company and its subsidiaries. This follows the completion of Arabtec’s first stage in its capital restructure scheme.

Following the awards, traders and investors wondered whether these awards will support the construction company, help it recover financially and increase its profits.

Over a period of three days, Dubai-listed Arabtec announced winning awards worth a combined AED 655 million ($178.29 million), according to data compiled by Mubasher.

Construction awards

On Monday, the construction firm revealed that its wholly-owned subsidiary Emirates Falcon Electromechanical Co (EFECO), alongside Al Naboodah, Co won an AED 113 million project for mechanical, electrical, and plumbing (MEP) works at the Dubai Creek Harbour.

Less than 24 hours later, Arabtec announced that its subsidiary Arabtec Construction LLC won an AED 353 million contract from the Abu Dhabi National Media Council to build the UAE Pavilion at the Expo 2020.

Project construction is set to begin in July, while delivery is scheduled for the last quarter of 2019.

Last but not least, earlier on Wednesday, Arabtec, which is listed on the Dubai Financial Market (DFM), unveiled four new contracts, registering a combined value of AED 298 million, awarded to its subsidiary Target Engineering Construction.

Analysts’ views

Following the announcements, traders and investors wondered if the new awards can rescue the company from its financial difficulties and consecutive quarterly and annual losses.

These new awards are a positive indicator that Arabtec is moving forward with its operating scheme despite the annual losses it incurred in 2016, commented trading manager at Al Sharhan Stock Centre LLC Fadi Al Kiswani.

These contracts may help Arabtec Holding improve its financial position in the coming two years, the analyst told Mubasher, adding that he expects the company to continue to post positive results in the first half of 2017 backed by improved operating performance.

DFM-listed Arabtec last reported turning to profits in the first quarter of 2017 with AED 17.6 million against losses in the year-ago period. As for the full year 2016, the contractor logged AED 3.512 billion in losses, up from AED 2.778 billion in 2015.

Al Kiswani added that new awards give a positive overview of the company and its stock, which has surged by 11.1% since the start of trading on Monday and by the end of Tuesday’s trading session to AED 3.

Meanwhile, Wadah Al Taha, board member at the Chartered Institute for Securities and Investments (CISI), told Mubasher that Arabtec’s problems were not because of the awards it received or whether they were few or many.

The problem, he said, was in the cost of these contracts, noting that the restructure programme completed last week did not indicate how the company will deal with the rising cost of contracts.

On Thursday, the DFM-listed contractor announced completing its recapitalisation programme, raising AED 1.5 billion in equity. The programme also allowed the company to extinguish its accumulated losses of AED 4.6 billion as at 31 December 2016, according to a company statement.

The financial impact of the newly-awarded contracts, which does not exceed AED 37 million, will not appear immediately in its financial statements, Al Taha told Mubasher, highlighting that the new deals will not have a major impact on Arabtec’s current position, which continues to be shrouded in uncertainty.

Translated by: Nada Adel Sobhi