Arabtec has plenty of projects in pipeline

Arabtec Holding has plenty of sizable projects in the pipeline, but the question is whether they are likely to pay off on schedule.

Bank of America Merrill Lynch's research team yesterday initiated coverage of Arabtec, the Dubai contractor, with a neutral rating and a price target of Dh2.20. The bank cited the company's slow progress towards diversifying away from Dubai along with delays in collecting receivables.

"Overall we view the progress to date as positive though far from ideal," said Karim Khalil, a Bank of America analyst in Dubai.

"We expect the pace of new awards to be slow, with the exception of a few government-sponsored major awards." Moreover, the risk of project cancellation or delays is still real, he said. On top of that the "order pipeline" remains centred on Dubai and largely dominated by private clients.

Excluding the Okhta Centre project in Russia, projects in Dubai represent 44 per cent of Arabtec's reported "order pipeline". Only 10 per cent is from government and quasi-government entities, generally considered the most reliable clients.

The contractor has had some success in the US$385 billion Saudi construction market by partnering with CPC, a subsidiary of the giant Saudi Binladin Group. Arabtec has secured two major awards worth Dh2.5bn this year, including Dh1.1bn for the Princess Nora bint Abdulrahman University project in Riyadh.

But the second project, Lamar Towers, has been suspended due to the client's inability to meet payment obligations. The Dubai contractor also withdrew from the $15bn Mile High Tower project in Jeddah because of concerns on margins. A successful and timely issuance of a Nakheel sukuk would be a positive catalyst for Arabtec.

Arabtec recently received a cash payment from Nakheel, accounting for about 40 per cent of the amount owed and expects to receive the balance in the form of a tradeable sukuk as outlined in the Nakheel restructuring plan.

Nakheel is in preliminary talks to list its bond on NASDAQ Dubai, according to its chairman Ali Rashid Lootah. Arabtec shares gained 0.5 per cent to close at Dh2.03 yesterday.

halsayegh@thenational.ae

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MATCH INFO

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At a glance

Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.

Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year

Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month

Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30

Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse

Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth

Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances

Moral education needed in a 'rapidly changing world'

Moral education lessons for young people is needed in a rapidly changing world, the head of the programme said.

Alanood Al Kaabi, head of programmes at the Education Affairs Office of the Crown Price Court - Abu Dhabi, said: "The Crown Price Court is fully behind this initiative and have already seen the curriculum succeed in empowering young people and providing them with the necessary tools to succeed in building the future of the nation at all levels.

"Moral education touches on every aspect and subject that children engage in.

"It is not just limited to science or maths but it is involved in all subjects and it is helping children to adapt to integral moral practises.

"The moral education programme has been designed to develop children holistically in a world being rapidly transformed by technology and globalisation."

CHINESE GRAND PRIX STARTING GRID

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Hydrogen: Market potential

Hydrogen has an estimated $11 trillion market potential, according to Bank of America Securities and is expected to generate $2.5tn in direct revenues and $11tn of indirect infrastructure by 2050 as its production increases six-fold.

"We believe we are reaching the point of harnessing the element that comprises 90 per cent of the universe, effectively and economically,” the bank said in a recent report.

Falling costs of renewable energy and electrolysers used in green hydrogen production is one of the main catalysts for the increasingly bullish sentiment over the element.

The cost of electrolysers used in green hydrogen production has halved over the last five years and will fall to 60 to 90 per cent by the end of the decade, acceding to Haim Israel, equity strategist at Merrill Lynch. A global focus on decarbonisation and sustainability is also a big driver in its development.