Drake & Scull shows strugglers way to go



The Dubai-listed contracting company Drake & Scull (DSI) is bucking the trend in a market where virtually all businesses related to the construction sector are struggling. The company was awarded two new contracts with a combined value of Dh240 million this week, solidifying analysts' convictions it is well placed to grow within its category of electrical, mechanical and plumbing (MEP) works.

"It's a bit of a contrarian. Most construction-related businesses have shed scale, while DSI has built scale in adverse market conditions. It just shows how well the firm is placed within its niche," said Saud Masud, the head of research at the Swiss bank UBS. DSI on Monday informed the market that it had won contracts for a government building and an apartment building on Saadiyat Island, which brings the total value of contracts awarded to it this year to Dh1.4 billion.

"Aside from this being a marked accomplishment for the company, we expect that this will also aid in boosting our returns towards the end of the financial year," Khaldoun Tabari, the chief executive, said in a statement on the Dubai Financial Market website. Mr Masud said DSI's entry into high-growth markets such as Abu Dhabi marked a significant move and complemented the company's aggressive expansion through acquisitions.

DSI in April fully acquired its Qatar unit for Dh97.3m. It is the company's third acquisition since last November, when it paid Dh145m for an 82 per cent stake in Passavant-Roediger, a water unit of Germany's Bilfinger Berger, and increased its stake in Kuwait's Electrical Contracting to 75 per cent in a Dh80m deal a month later. Analysts believe the stock is trading at a significant discount, considering the company's fundamental strength and low-risk profile.

In a recent note to investors, analysts at Prime Securities recommended a "strong buy" for DSI shares and suggested a price target of Dh1.15. The analysts noted that unlike other companies in its sector, DSI had no exposure to Dubai World-related entities. DSI shares yesterday closed 0.12 per cent lower at Dh0.82. They are up close to 5 per cent since the beginning of this week. skhan@thenational.ae

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When to go: Florida is best experienced during the winter months, from November to May, before the humidity kicks in.

How to get there: Emirates currently flies from Dubai to Orlando five times a week.
COMPANY PROFILE
Name: HyperSpace
 
Started: 2020
 
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
 
Based: Dubai, UAE
 
Sector: Entertainment 
 
Number of staff: 210 
 
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
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Send “thenational” to the following numbers or call the hotline on: 0502955999
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From Zero

Artist: Linkin Park

Label: Warner Records

Number of tracks: 11

Rating: 4/5

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Director: Magizh Thirumeni

Stars: Ajith Kumar, Arjun Sarja, Trisha Krishnan, Regina Cassandra

Rating: 4/5

 

The specs: 2019 Mercedes-Benz C200 Coupe


Price, base: Dh201,153
Engine: 2.0-litre turbocharged four-cylinder
Transmission: Nine-speed automatic
Power: 204hp @ 5,800rpm
Torque: 300Nm @ 1,600rpm
Fuel economy, combined: 6.7L / 100km

Company%20Profile
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About Takalam

Date started: early 2020

Founders: Khawla Hammad and Inas Abu Shashieh

Based: Abu Dhabi

Sector: HealthTech and wellness

Number of staff: 4

Funding to date: Bootstrapped

The specs
Engine: 4.0-litre flat-six
Power: 510hp at 9,000rpm
Torque: 450Nm at 6,100rpm
Transmission: 7-speed PDK auto or 6-speed manual
Fuel economy, combined: 13.8L/100km
On sale: Available to order now
Price: From Dh801,800
UAE currency: the story behind the money in your pockets
UAE currency: the story behind the money in your pockets
Guide to intelligent investing
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Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
 
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
 
Round 3: February 7-9, Dubai Autodrome – Dubai
 
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
 
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
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The specs

Engine: Four electric motors, one at each wheel

Power: 579hp

Torque: 859Nm

Transmission: Single-speed automatic

Price: From Dh825,900

On sale: Now

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”