Arabtec stock surged again yesterday on bets the builder was about to bag the contract to build Abu Dhabi's new airport terminal.
But the airport authority said that no decision had been made on the multibillion-dollar Midfield Terminal project, leaving analysts scratching their heads about why the contractor's share price had advanced nearly 70 per cent in just nine weeks.
The project, managed by Abu Dhabi Airports Company, is expected to be awarded in the second quarter of this year, the company said in a statement.
Fourteen groups initially pre-qualified for the project, but only six were shortlisted in November. Arabtec is part of a consortium that includes Consolidated Contracting Company of Athens and TAV Construction of Instanbul.
Ziad Makhzoumi, Arabtec's chief financial officer, said the contractor "made bids for several projects but cannot announce them until they are confirmed".
Arabtec, listed on the Dubai Financial Market, has risen to Dh2.70 a share from Dh1.56 on January 2. The shares rose 10.7 per cent yesterday despite a decline in the overall market. Arabtec rose 10 per cent on Monday with record trading valued at more than Dh200 million (US$54.4m).
"We have heard nothing from the company to support the current outperformance of the stock," said Muneeba Kayani, an analyst for Morgan Stanley. In a note to investors, the bank said the contractor's current price implied an order book of between Dh24 billion and Dh32bn.
That means Arabtec, which helped to build the Burj Khalifa in Dubai, would need to have generated at least an additional Dh10bn of work since the third quarter of last year to justify its current price.
The 700,000-square-metre Midfield Terminal Building, one of the capital's most significant projects, is expected to open in 2017. It will be home to Etihad Airways and will be the main gateway to the capital. Initially, it will have a capacity of 27 million to 30 million passengers a year.
Fund managers feared that the surge in Arabtec's stock price was triggered by privileged information leaked to the market.
"There is absolutely no news to drive up the stock price. The [worst] part is, if a major announcement comes out in coming days, it will be a big hit for disclosure and transparency in the market," said Wadah Al Taha, the chief investment officer at Al Zarooni Group, an investment company in Dubai. "The stock exchange and regulator should be monitoring the price movement."
Sebastien Henin, a portfolio manager at The National Investor in Abu Dhabi, said investors have no choice but to wait and see. "These movements are very weird and not justified at all, but what can you do? It's pure speculation."
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