Dubai-based Drake & Scull International has won an infrastructure contract valued at Dh75 million for the construction of a sewerage project in Al Ain.
The contractor's water and power unit said yesterday work on the project would start immediately and would be completed by November next year.
DSI has been diversifying outside of its home market since the onset of the global financial downturn in the region.
With no new acquisitions planned for this year, the company is considering providing a dividend to shareholders for the first time since 2009.
Last week, Credit Suisse said it favoured DSI over Arabtec Holding, the only other Dubai-listed construction company.
"We reiterate our preference for DSI over Arabtec on the back of strong backlog growth for DSI compared to stalled growth and declining profitability for Arabtec which we think is yet to be reflected in consensus numbers," Ahmed Badr, an analyst at the Swiss bank said in a note.
DSI trades at a price to earnings ratio of 9.3 times, a discount of 31 per cent to Arabtec's PE of 13.5 times, Mr Badr said.
The analyst has an "outperform" rating on the stock, with a target price of Dh1.26 a share. That represents a premium of 50 per cent to yesterday's closing price of 84 fils. DSI's solid backlog growth, mainly because of regional diversification, is expected to continue to offset declining profitability margins caused by increased competition in the region.
The company's backlog reached Dh7.5 billion in the second quarter of this year, up from Dh5.7bn in the same period last year, which should reflect in earnings from this year to 2014.
The company started its operations in Algeria during the second quarter of this year and is planning to tap new markets, such as India, Iraq, Vietnam and Djibouti.
DSI has faced minimal problems from turmoil in the region, Khaldoun Tabari, its chief executive, told The National last month.