Arabtec Holding, the UAE's largest construction firm by market capitalisation, has seen its profits for the first half of 2008 climb to Dh505 million as compared to Dh173m during the corresponding period in 2007, a growth of 191 per cent.
The company also announced that the group consolidated revenue increased to Dh4.1 billion compared to Dh1.7bn registered in the first half 2007, up 135 per cent, the company said in a statement yesterday.
Attributing the tripling in profits to the increase in revenue and net profit percentage, CEO Riad Kamal said this "resulted from the expansion strategy implemented by Arabtec and acquisitions, which focused on proper integration for large-scale operations and managing all resources required for construction activities, including human, machinery and technical resources".
He said the company adopted a strategic plan over the past year, which aims to diversify projects portfolio revenue mix through increasing the number of subsidiaries that complements the business integration without compromising safety and quality standards and delivery schedule.
"Arabtec holds a leading position among the region's largest construction companies, with more than Dh36bn worth of projects currently under construction in the UAE, Russia, Qatar, Jordan, Syria and Pakistan," he said, adding that Arabtec is also in the final stages of negotiations for a number of other major projects and acquisitions to be concluded and announced soon.
Al Mal Capital in a report on the company gave the share price an outperform rating. "We initiate coverage with an outperform rating and a price target of Dh26.7. Arabtec offers investors 51.2 per cent upside on the current price. Arabtec is trading at a low 2008 estimated P/E of 12.7 compared to an average industry comparable of 14.5. According to the report, short-term catalysts would include penetrating the Saudi market, further acquisitions, a proven track record of successful overseas projects and the reclassification of GCC citizens in foreign ownership calculations.
"Arabtec has forged relationships with Emaar, which represents 11 per cent of the current backlog. Arabtec is currently working alongside Emaar to build the Burj Dubai, the tallest structure in the world. On the back this relationship, Arabtec may penetrate other markets such as Saudi Arabia and India. We see Arabtec's relationship with Emaar and penetration of the Saudi market as a huge growth potential for Arabtec," said the report.
International expansion is of strategic importance for it, with one third of order backlog outside of the UAE.