Galfar Engineering's second-quarter profit of 2.4 million Omani rials (Dh22.8m) beat expectations but a number of loss-making projects, including the Muscat Expressway, have hurt the stock's performance so far this year.
The Omani contractor reversed its first-quarter loss of 800,000 Omani rials but the results are still down 36 per cent against the second quarter last year.
"We were expecting increased construction activity to fuel a 6 per cent quarter-on-quarter growth in the second-quarter revenues, but the reported top line fell 10 per cent short of our 94m Omani rial estimate," said Roy Cherry, an analyst at Shuaa Capital in Dubai. "The gross profit margin landed 6.1 per cent higher quarter-on-quarter, slightly above our forecast but still well below the 'normal' level of 10 to 15 per cent."
This could be attributed to the declining - but nevertheless present - impact of loss-making projects. The 54km, six-lane project was launched in 2005, and the company said it was seeking reimbursement for some of its additional costs related to delays.
Galfar also has the lowest ratio of backlogged projects to sales among its peers in the region, Mr Cherry said. So far this year, Galfar has secured 125m rials worth of contracts, primarily for government road projects.
"While the company beat our low expectations for the quarter, the bigger picture remains dominated by a backlog with an undisclosed baggage of loss-making projects, the lowest backlog-to-sales ratio among general contractors and thus the least future earnings visibility," Mr Cherry said.
He said Galfar was also the most highly leveraged contractor he covered, with a debt-to-equity ratio of 124 per cent.
Mr Cherry maintains his "sell" recommendation on Galfar with a fair-value target of 0.39 Omani rials per share. The stock traded at 0.45 rials yesterday.
halsayegh@thenational.ae
ELIO
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5 of the most-popular Airbnb locations in Dubai
Bobby Grudziecki, chief operating officer of Frank Porter, identifies the five most popular areas in Dubai for those looking to make the most out of their properties and the rates owners can secure:
• Dubai Marina
The Marina and Jumeirah Beach Residence are popular locations, says Mr Grudziecki, due to their closeness to the beach, restaurants and hotels.
Frank Porter’s average Airbnb rent:
One bedroom: Dh482 to Dh739
Two bedroom: Dh627 to Dh960
Three bedroom: Dh721 to Dh1,104
• Downtown
Within walking distance of the Dubai Mall, Burj Khalifa and the famous fountains, this location combines business and leisure. “Sure it’s for tourists,” says Mr Grudziecki. “Though Downtown [still caters to business people] because it’s close to Dubai International Financial Centre."
Frank Porter’s average Airbnb rent:
One bedroom: Dh497 to Dh772
Two bedroom: Dh646 to Dh1,003
Three bedroom: Dh743 to Dh1,154
• City Walk
The rising star of the Dubai property market, this area is lined with pristine sidewalks, boutiques and cafes and close to the new entertainment venue Coca Cola Arena. “Downtown and Marina are pretty much the same prices,” Mr Grudziecki says, “but City Walk is higher.”
Frank Porter’s average Airbnb rent:
One bedroom: Dh524 to Dh809
Two bedroom: Dh682 to Dh1,052
Three bedroom: Dh784 to Dh1,210
• Jumeirah Lake Towers
Dubai Marina’s little brother JLT resides on the other side of Sheikh Zayed road but is still close enough to beachside outlets and attractions. The big selling point for Airbnb renters, however, is that “it’s cheaper than Dubai Marina”, Mr Grudziecki says.
Frank Porter’s average Airbnb rent:
One bedroom: Dh422 to Dh629
Two bedroom: Dh549 to Dh818
Three bedroom: Dh631 to Dh941
• Palm Jumeirah
Palm Jumeirah's proximity to luxury resorts is attractive, especially for big families, says Mr Grudziecki, as Airbnb renters can secure competitive rates on one of the world’s most famous tourist destinations.
Frank Porter’s average Airbnb rent:
One bedroom: Dh503 to Dh770
Two bedroom: Dh654 to Dh1,002
Three bedroom: Dh752 to Dh1,152
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Who's who in Yemen conflict
Houthis: Iran-backed rebels who occupy Sanaa and run unrecognised government
Yemeni government: Exiled government in Aden led by eight-member Presidential Leadership Council
Southern Transitional Council: Faction in Yemeni government that seeks autonomy for the south
Habrish 'rebels': Tribal-backed forces feuding with STC over control of oil in government territory
The specs: 2018 Audi RS5
Price, base: Dh359,200
Engine: 2.9L twin-turbo V6
Transmission: Eight-speed automatic
Power: 450hp at 5,700rpm
Torque: 600Nm at 1,900rpm
Fuel economy, combined: 8.7L / 100km
The Ashes
Results
First Test, Brisbane: Australia won by 10 wickets
Second Test, Adelaide: Australia won by 120 runs
Third Test, Perth: Australia won by an innings and 41 runs
Fourth Test: Melbourne: Drawn
Fifth Test: Australia won by an innings and 123 runs
