Depa, an interior contractor company based in Dubai, received a big vote of confidence from Morgan Stanley on Monday, after it increased its shareholding in the company.
The US investment bank bought 800,000 shares in Depa for 39 cents each, upping its stake from 4.93 per cent to 5.06 per cent, the company said in a statement to the Nasdaq Dubai exchange.
Depa's shares, listed on the exchange, were flat at 44.8 US cents in trading yesterday.
Depa swung back to profit for the first six months of the year, reporting profits of Dh48 million compared with losses of Dh103.7m for the year-earlier period.
And a trading statement released in October "made good reading", analysts from NBK Capital wrote in a research report.
"The backlog at end of Q3 2011 stands at Dh3.9 billion, as against Dh2.3bn at end of Q2 2011 Ö awards remain strong mainly in Qatar and also for Singapore-based subsidiary Design Studio."
The company also signed a Dh929m contract in October to fit 27 airport lounges at the new Doha International Airport in Qatar. Arabtec, a major client, has also been picking up construction contracts in Saudi Arabia and Kuwait, with the latter offering a potential opening for Depa.
However, NBK Capital warned trouble in Depa's native UAE market had convinced analysts to shy away from forecasting better times for the company's stock price.
"In the absence of full financials, and with question marks still existing on the UAE market, and especially recent developments in Abu Dhabi [such as] the cancellation of the Guggenheim museum tender, which we expected Depa to win, we would rather wait until we have more visibility on margins before upgrading our forecasts."
But although the company is fundamentally solid, the stock's illiquidity would limit its potential returns, said Ankur Khetawat, an analyst at HC Securities.