Arabtec shares are on a roll. The Dubai-listed construction company's shares extended gains to 45 per cent for the week yesterday, making it their best three-day performance since July 2014.
Rumours of a stake increase in the company by former chief executive Hasan Ismaik continued to propel the stock, which rose by 14.5 per cent to Dh1.65. Nearly 500 million shares changed hands.
Mr Ismaik’s shareholding, which increased to 11.91 per cent from 11.81 per cent on Monday, remained unchanged yesterday. “Exchange data indicates that Hassan Ismaik has only acquired around 5 million of the shares traded over the past three days, meaning other serious buyers are piling in as well,” said Tariq Qaqish, the head of asset management at Al Mal Capital in Dubai.
Mr Ismaik was appointed as Arabtec’s chief executive in February 2013. Under his watch, the company announced plans for an ambitious US$40 billion project in March 2014 to build one million affordable homes in Egypt, setting itself the target of becoming one of the world’s top 10 contractors by the end of 2018. At its peak, the company stock topped Dh7 in 2014.
Mr Ismaik’s decision to increase his shareholding has attracted local investors back to the stock, despite the challenges faced by the company and the wider construction sector.
Arabtec last month announced a preliminary annual loss of Dh2.3 billion for last year, which it blamed on a difficult regional construction market and some poorly performing projects, saying that it would adopt “a more selective approach to project tendering” this year.
“A lot of investors have been taken by surprise to see Hasan Ismaik increasing his stake again,” said Sebastien Henin, the head of asset management at The National Investor (TNI) in Abu Dhabi.
“Fundamentally nothing has changed with the company but local investors know that he is very familiar with the company, so if he is increasing his shareholding they think it is a good play for them.”
The company issued a statement yesterday stating that there was no substantial news that had affected the share price.
A spokesman for the construction group declined to comment on the fresh share rises yesterday afternoon.
Arabtec’s rally have the Dubai Financial Market General Index a rise of 0.48 per cent, to 3,287.02, with Amlak Finance, Dubai Investments and Union Properties among the index’s other main gainers.
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