July 23 (Bloomberg) -- Drake & Scull International PJSC surged to a record on bets a growing construction contract pipeline in the United Arab Emirates would help the Dubai-based company double second-quarter profit.
Drake & Scull, which supplies engineering services to the construction industry, soared 8.4 percent to 1.16 dirhams, the strongest since the stock was listed in March 2009, at the close in Dubai. Volume jumped to about 259 million shares, almost six times the three-month daily average and the most on the benchmark DFM General Index, which rose 0.5 percent.
The company’s contract wins have picked up as Arabtec Holding Co., the U.A.E.’s biggest construction company, benefits from a property-market recovery. Shares of Drake & Scull have rallied 17 percent since Arabtec granted the company on July 15 a 233 million-dirham ($63 million) contract for works at the Fairmont Abu Dhabi Hotel complex. Drake & Scull’s second-quarter profit will almost double to 51 million dirhams, according to the median estimate of four analysts compiled by Bloomberg.
“There may well be expectations of stronger earnings on the back of recent contract wins,” said Amer Khan, a Dubai-based director at Shuaa Asset Management. “They have been adding to their backlog quite well, in the UAE and especially Saudi Arabia.”
Last month, Drake & Scull and Habtoor Leighton Specon won a 522-million riyal contract for a project at the King Fahad Medical City in the kingdom. Saudi Arabia, the world’s biggest oil exporter, is spending more than $500 billion to improve infrastructure and industry, as well as create jobs.
Shares of Drake & Scull have rallied 65 percent this year, compared with 58 percent for the DFM and 24 percent for Arabtec.
The company’s “healthy contracts pipeline” is boosting the shares, said Montasser Khelifi, Dubai-based senior manager for global markets at Quantum Investment Bank Ltd.
One analyst recommends investors buy Drake & Scull shares, seven say hold and three advise on selling them, according to data compiled by Bloomberg.
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