Professional Documents
Culture Documents
Sector Construction
June 2014
GCC Contractors
Hettish Karmani
Senior Manager Research
hkumar@global.com.kw
Phone: (965) 2295-1281
Global Investment House
www.globalinv.net
Al Khodari, KSA
Arabtec, UAE
DSI, UAE
Nass Corp, Bahrain
CGC, Kuwait
Galfar, Oman
Mkt Cap
(USDmn)
618.8
3,733.6
958.1
103.9
414.5
278.8
Price
In (LC)
43.7
3.1
1.5
0.2
1.1
0.4
Stock Performance
1m
3m
12m
12.4% 25.0% 39.6%
-49.8% -22.1% 109.0%
0.7%
-9.4% 63.8%
0.6%
5.3% 19.5%
-5.2%
-4.0%
-8.6%
0.0%
0.0%
0.2%
P/E
2014e
23.45
28.11
16.56
NA
NA
NA
P/BV
2014e
2.66
2.33
1.13
NA
NA
NA
Please see penultimate page for additional important disclosures. Global Investment House (Global) is a foreign broker-dealer
unregistered in the USA. Global research is prepared by research analysts who are not registered in the USA. Global research is
distributed in the USA pursuant to Rule 15a-6 of the Securities Exchange Act of 1934 solely by Cadwyn Point Partners LLC, an SEC
registered and FINRA-member broker-dealer.
8%
AKS
NASS
18%
12%
12%
6%
6%
CGC
GECP
GECP
DSI
CGC
ARTC
NASS
ARTC
Net Margin
Return on Equity
30%
18%
24%
NASS
AKS NASS
AKS
DSI
4%
DSI
CGC
2%
0%
8%
4%
11%
8%
ARTC
6%
CGC
5%
0%
ARTC
14%
12%
Gross Margin
17%
16%
20%
0%
100
120
140
180
GECP
GECP
300
260
300
360
Receivable Days
June - 2014
1Q13
1,279
1,132
148
78
70
13
58
4Q13
1,581
1,434
147
90
57
22
57
1Q14
1,500
1,335
165
91
74
15
67
QoQ
-5.2%
-7.0%
12.4%
1.6%
29.7%
-34.3%
18.8%
YoY
17.2%
17.9%
11.7%
17.2%
5.4%
13.1%
15.8%
11.5%
5.5%
4.5%
9.3%
3.6%
3.6%
11.0%
4.9%
4.5%
On a QoQ basis, the sectors profit grew 18.8%, mainly driven by AKS and Arabtec. Profit of AKS and Arabtec grew
285.2%QoQ and 13.0%QoQ, respectively. AKSs profit increase was driven by higher other income due to annual
auction of machinery during the quarter. On the other hand, Arabtecs profit growth is mostly ascribed to lower cost of
sales resulting in gross margin improving to 15.3% from 10.8%.
June - 2014
(USD bn)
2,000
1,500
1,000
500
2005
2006
2007
2008
2009
2011
Mar-13
1Q-13
2004
3Q-12
0
2010
Mar-14
1Q-14
4Q-13
3Q-13
2Q-13
4Q-12
2Q-12
1Q-12
4Q-11
3Q-11
2Q-11
1Q-11
4Q-10
3Q-10
2Q-10
1Q-10
4Q-09
3Q-09
2Q-09
1Q-09
4Q-08
3Q-08
2Q-08
80
70
60
50
40
30
20
10
1Q-08
(USD bn)
Mar-14
(USD bn)
1,440
1,080
720
360
0
Saudi Arabia
June - 2014
UAE
Oman
Kuwait
Qatar
Contracting Companies
New order receipts surge to USD1.7bn in 1Q14 from USD0.8bn in 1Q13
Backlog rises to USD12.8bn in 1Q14 from USD10.4bn in 1Q13
Arabtec continues to lead in order backlog (68%), followed by DSI (17%) and AKS (11%)
Order Receipts 1Q14
1.0
1.7
2.0
1.3
0.9
0.8
1.0
0.8
0.6
0.4
0.2
0.1
0.2
0.3
Arabtec
GECP
1Q14
4Q13
3Q13
2Q13
1Q13
DSI
AKS
(USD bn)
1.1
1.2
3.0
3.0
(USD bn)
Backlog 1Q14
8.0
Backlog (Aggregate)
14.0
12.2
12.1
12.3
(USD bn)
13.0
12.0
11.0
10.4
6.0
2.0
10.0
3.3
4.0
0.9
1.5
Arabtec
DSI
1Q14
4Q13
3Q13
2Q13
1Q13
GECP
9.0
AKS
(USD bn)
7.1
12.8
AKS
11%
Arabtec
68%
Arabtec
55%
GECP
12%
GECP
4%
DSI
17%
Market size assumed to be the aggregate of the mentioned players
June 2014
DSI
26%
Market size assumed to be the aggregate of the mentioned players
Financials in Chart
EV/Backlog (x) v/s Backlog/Sales (x)
1.2x
AKS
EV/Backlog
(Last Reported)
1.0x
Arabtec
0.8x
GECP
0.6x
0.4x
0.2x
DSI
4.5x
4.0x
3.5x
3.0x
2.5x
2.0x
1.5x
1.0x
0.0x
19.0%
8.0%
15.0%
6.0%
11.0%
4.0%
7.0%
2.0%
3.0%
0.0%
ARTC
DSI
ARTC
DSI
350
80
300
64
250
48
200
32
150
16
100
ARTC
June 2014
DSI
AKS
ARTC
DSI
AKS
16.0%
200.0%
12.0%
150.0%
8.0%
100.0%
4.0%
50.0%
0.0%
0.0%
ARTC
DSI
ROE 1Q14
ARTC DSI
ROA 1Q14
16.0%
8.0%
12.0%
6.0%
8.0%
4.0%
4.0%
2.0%
0.0%
0.0%
ARTC
DSI
ARTC
20.0%
200.0%
15.0%
150.0%
10.0%
100.0%
5.0%
50.0%
0.0%
DSI
0.0%
ARTC
June 2014
DSI
ARTC DSI
APPENDIX
DSI - Business Segments
Segments
Revenue Share (%)
Net Profit Share (%)
Engineering
46.4
68.5
Civil
43.6
29.7
Others
3.8
-20.6
* For 1Q14
Construction
MEP
68.4
103.3
8.6
3.2
Others
5.6
-42.5
Contracting
99.5
95.8
Trading
0.5
4.2
* For 1Q14
June 2014
Segment
Kuwait
Algeria
UAE
Engg.-MEP
Civil
Engg.-MEP
Egypt
Civil
Project Name
Sheikh Jaber Cultural Center ,Retail & Health care Facilities
Mixed-use development in Algiers
Plaza View, a mixed-use development in Abu Dhabi
OSBL construction and civil works for Utilities and offsite
facilities for Tahrir Petrochemical Corporation Project
Size (USDmn)
35
40
30
599
Segment
KSA
Contracting
KSA
Contracting
KSA
Contracting
June 2014
Project Name
Construction of Storm Water Drainage Channels, Networks
and Clearing Wadi Sulai (Phase 2) from Ministry of Municipal
& Rural Affairs (Riyadh Municipality)
2nd phase of the construction of the Support Deanship
Building from Ministry of Higher Education (Taibah
University)
Engineering, Procurement and Construction of 33KV Switch
Stations from Royal Commission for Jubail & Yanbu
Size (USDmn)
14
9
21
2,200
105
2,000
(USD/Ton)
(USD/bbl)
100
95
1,800
90
1,600
85
80
1,400
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14
Aluminum
8,500
160
8,000
7,500
(/dmtu)
(USD/Ton)
140
7,000
120
100
6,500
6,000
80
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14
Iron ore
750
67.5
730
66.8
710
66.1
(USD/Ton)
(USD/Ton)
Copper
690
670
65.4
64.7
650
64.0
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14
Steel Rebar
June 2014
10
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June 2014
11
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