Drake & Scull International PJSC fell the most in more than two years on investor bets gains of 40 percent this quarter are overdone.
Drake & Scull, which supplies engineering services to the construction industry, declined 6.4 percent, the steepest slump since February 2011, to 1.02 dirhams at the close in Dubai. The stock was the biggest decliner by index points on Dubai’s benchmark DFM General Index, which lost 0.3 percent. About 115 million Drake & Scull shares traded, or 3.2 times the three-month daily average.
The quarter’s rally pushed the shares’ estimated price-to-earnings ratio to 16.5 yesterday. The ratio declined to 15.5 times today, compared with multiples of 13.6 and 10.7 for Dubai’s benchmark and the MSCI Emerging Markets Index. Drake & Scull said on May 21 it won a 1.73 billion-riyal ($461 million) contract in Saudi Arabia. In April the company said it won projects worth 1.1 billion dirhams ($299 million) in Saudi Arabia, Qatar and Abu Dhabi in the first-quarter.
“Shares have gained much over the last month and now there is profit taking after all the positive news regarding winning contracts,” said Montasser Khelifi, a Dubai-based senior manager for global markets at Quantum Investment Bank Ltd.
The stock’s 14-day relative strength index rose to 76.3 yesterday, signaling to some investors that the security was poised to decline. The measure fell to 58.8 today. Three analysts recommend investors buy the stock, six say hold and three sell, according to data compiled by Bloomberg.
Dubai’s benchmark index has gained 32 percent this quarter.