A Saudi civil contractor became a bright spot on the nation's stock exchange yesterday after the company announced a 265 million riyal contract award and a partnership agreement to establish a training institute in the kingdom.
Mohammad Al Mojil Group (MMG) jumped for the second consecutive day as the company signed a letter of intent with Korea's Daelim to carry out mechanical and electrical works on projects in Saudi Arabia's western region. The deal is worth 265m riyals, with the contractor providing labour and equipment, according to a filing on the Tadawul All-Share Index.
Shares rose as high as 2.8 per cent by midday yesterday, their highest since December 13, before closing up 1.2 per cent at 17.80 riyals. The shares have gained more than 6 per cent in the past two days.
MMG, which covers oil and non-oil sectors including marine and industrial, also partnered with Oman's National Training Institute to establish the Saudi Institute for Advanced Training. MMG will own 51 per cent of the venture, based in Dammam.
MMG is attempting an aggressive expansion policy outside its home market, with energy and civil-related projects in Abu Dhabi key targets. MMG has historically had difficulty winning awards outside the kingdom, and has lost some of its market share in its domestic market to foreign companies such as Drake and Scull International and Arabtec Holding.
This month, MMG announced it had been awarded a 197m riyal contract to build an engine oil factory for Hyundai Engineering and Construction in Abu Dhabi, its first in the UAE.
Work is scheduled to begin next month, with construction expected to last until December next year.
However, MMG posted a net loss of 179.5m riyals for last year, compared with net profit of 40.3m riyals in 2009. The company has a market capitalisation of 2.1 billion riyals.
Analysts have welcomed the Saudi contractor's efforts to bid for larger contracts inside the kingdom and move specifically into civil-related works, but the pace is still slow. MMG went public in 2008, raising 6.5bn riyals at its initial public offering.