Arabtec’s share price tumbled yesterday in a sign that the company has not yet restored investor confidence after the sudden departure of Hasan Ismaik as chief executive after just 15 months in the role.
Shares fell again in morning trading on Monday, by 9.9 per cent.
Shares in the developer fell by 9 per cent to Dh3.84 yesterday, their lowest level since March.
That means the shares have now lost more than half their value from their high price in May of Dh7.74 each.
It also means that Mr Ismaik’s stake has diminished by almost Dh5 billion in the space of three weeks.
"Today's move was harsh," said Taher Safieddine, a research analyst at Shuaa Capital. "The rumours and announcements have hammered the company. Every rumour was floating around the market for two or three weeks before Arabtec announced it. All of this definitely had a negative impact on the stock. This is why we've seen retail investors panicking."
“Arabtec’s management needs to come to the market with a clear strategy and put an end to all the speculation.”
Another analyst, who declined to be named, said: “Arabtec has not made a statement about the company’s future strategy – quite possibly because the company itself doesn’t know what its future strategy will be at the moment. We believe that there could be more management changes to come.”
The consensus of analysts is a target price of Dh2.42 to Dh1.42 lower than its current price – with a majority of analysts recommending that investors sell or hold the stock.
“It’s a fiasco,” one analyst, who also declined to be named, said of the situation.
UPDATE: Arabtec shares fall 9.9 per cent, Monday morning.
Mr Ismaik was replaced as chief executive last week by Mohamed Ali Al Fahim, the former head of finance at the International Petroleum Investment Company (Ipic), which indirectly owns an 18.94 per cent stake in the company though Aabar, an investment vehicle.
Mr Ismaik at last report owned a 28.85 per cent stake in the company, worth Dh4.86bn at yesterday’s share price. This is down from the approximately Dh9.7bn his stake was worth in early June.
It is not known how Mr Ismaik was able to finance this purchase of the company’s equity.
On Wednesday, Mr Ismaik was quoted as saying that he would sell his stake “if approached by any government entity”, but on Friday he appeared to have changed his mind, telling Reuters that he would keep the stake. The slide began after Aabar Investments, which is owned by Ipic, announced in June that it was reducing its shareholding from 21.57 per cent to 18.85 per cent.
Last Sunday, the Dubai Financial Market announced that Aabar had further reduced its stake to 14.32 per cent, but later retracted this, describing the incident as the result of a "glitch".
Arabtec said that Mr Ismaik resigned “due to his personal work and investment preoccupations”, but declined to provide further details.
Arabtec earned profits of Dh153m in the first quarter against revenues of Dh2.152bn, and profits of Dh486.3m last year against revenues of Dh 7.369bn.
The company’s shares have nonetheless risen by 87.3 per cent over the past year – even after the company’s losses were taken into account.
Arabtec has won a number of high-profile deals as Abu Dhabi seeks to use its political clout to gain business for its flagship contractor. Most prominently, it announced in March a $40bn contract with the Egyptian government to construct a million new homes for low-income families.
It has a backlog of commissioned construction projects worth Dh215bn.
Officials at Arabtec were unavailable for comment.
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Three ways to get a gratitude glow
By committing to at least one of these daily, you can bring more gratitude into your life, says Ong.
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The UN General Assembly President in quotes:
YEMEN: “The developments we have seen are promising. We really hope that the parties are going to respect the agreed ceasefire. I think that the sense of really having the political will to have a peace process is vital. There is a little bit of hope and the role that the UN has played is very important.”
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REFORM OF THE SECURITY COUNCIL: “This is complicated and it requires time. It is dependent on the effort that members want to put into the process. It is a process that has been going on for 25 years. That process is slow but the issue is huge. I really hope we will see some progress during my tenure.”
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
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UAE currency: the story behind the money in your pockets
Killing of Qassem Suleimani
Match info:
Manchester City 2
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Newcastle United 1
Yedlin (30')
If you go:
Getting there:
Flying to Guyana requires first reaching New York with either Emirates or Etihad, then connecting with JetBlue or Caribbean Air at JFK airport. Prices start from around Dh7,000.
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Killing of Qassem Suleimani
KILLING OF QASSEM SULEIMANI
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