Arabtec soars after winning $817mn deal

UAE construction giant's stock surges 7.38% after winning contract to build around 2,300 houses.
Arabtec soars after winning $817mn deal
By John Irish and Daliah Merzaban
Wed 09 Apr 2008 05:01 PM

Dubai-based construction firm Arabtec Holding said on Wednesday it has won a 3 billion dirham ($817 million) contract to build almost 2,300 houses in the emirate, pushing its stock to a record high.

The stock, in which foreigners can own up to 49%, surged 7.38% to 13.10 dirhams on the announcement.

Arabtec, the largest UAE construction company by market value, won the contract from the Mohammed bin Rashid Housing Establishment, it said in a statement on the Dubai bourse website.

Arabtec trades at 9.76 times expected 2007 earnings, below the real estate and construction sector average of 11.72 times, according to data from newswire Reuters.

"If you look at the Dubai market, if you want exposure to the construction sector there is nothing but Arabtec," said Amr Diab, head of sales at EFG-Hermes in Dubai.

"The only thing holding Arabtec back is that it has reached its foreign ownership limit," he said.

HSBC's price target for Arabtec is 18 dirhams while Morgan Stanley has a target of 18.87 dirhams on the stock.

Construction will be completed in phases over the next 40 months, it said, taking the number of houses under construction by the company to 5,000.

In 2007, the company won $2.3 billion worth of contracts in the UAE, according to a contractor survey by the London-based magazine Middle East Economic Digest (Meed).

Quarterly net profit of the firm was expected to reach 185.47 million dirhams after 60.1 million dirhams in the same period a year ago, according to the average of a Reuters survey of three analysts. (Reuters)

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