When will Arabtec Holding shareholders get a break?
Despite an aggressive push to gain revenue from new contracts around the Gulf, analysts said the company's woes seemed far from over. But they added there was a glimmer of hope on the horizon.
Yesterday, the company's stocks fell 0.55 per cent to Dh1.80 a share as HSBC downgraded its rating of Arabtec, the Gulf's largest construction firm, to "underweight".
Violent protests in Egypt are also raising doubts about projects in which Arabtec is involved, including a joint venture with Amer Group working on projects said to be worth 300 million Egyptian pounds."The biggest concern for us are receivables on hold," said Majed Azzam, a property analyst at Alembic HC Securities.
"Given the situation and sentiment in the market with prices declining there's still fear that we'll see more deterioration of receivables in the UAE."
The outlook for the Dubai property sector is still weighing on Arabtec's prospects, Mr Azzam added. But he said the picture was not all bad for Arabtec.
"We like the move to issue new equity because this allows it to explore new opportunities in other growth markets," Mr Azzam said. "They were very successful going into Qatar and Saudi Arabia through JVs [joint ventures], but to get your own work you need a bigger balance.
"Arabtec and other contractors are trying to avoid the UAE and go into other countries. Everyone's trying to get a piece of Saudi Arabia and Qatar."
But Alfred Fayek, the head of Mena equity sales at EFG-Hermes, said other Gulf markets could still provide a boost for Arabtec.
"Arabtec should be poised to add some life to [its stock price] as one of the performers in the market during the coming year," Mr Fayek said. "But not because of what's going on in the UAE", rather because of projects elsewhere in the Gulf.
"Everything's cooling down here in the UAE right now," he said. "It's quite clear that there won't be any big revenues coming from Dubai, at least this year."