Dubai: Dubai's Drake & Scull International has $136.1 million (Dh499.7 million) to spend on acquisitions in 2010, which includes three firms, as it continues to expand and weather a downturn at home, an executive said yesterday.
Drake — a contractor specialising in mechanical, engineering and plumbing (MEP) businesses and which listed on the Dubai Financial Market in March — has been rapidly expanding operations outside Dubai, where house prices have plunged some 60 per cent since their peaks in 2008, and billions of dollars worth of projects have been put on hold or cancelled.
"We are hoping to have the Qatar acquisition in the first quarter, one in Saudi Arabia in the second quarter and the second in the third quarter," Zeina Tabari, the firm's chief corporate affairs officer told Reuters.
The Qatar acquisition will be a MEP business while the two in Saudi Arabia will be an MEP and a civil construction firm, she added.
Drake's projects include luxury hotels such as the Shangri-La Qaryat Al Beri in Abu Dhabi.
Drake, which is eyeing two new contracts in Abu Dhabi and Kuwait before the second quarter, has won three projects so far this year in Abu Dhabi.
Tabari declined to give a value for the contracts but said the firm, which won its first contract in Thailand in September, is looking to enter Oman and Egypt this year.
The company won seven contracts worth a total of Dh2 billion in the Gulf Arab region, Sudan and Thailand in 2009, bringing its project backlog to Dh3.3 billion.
Tabari said the company did not expect to take provisions in the first quarter, after taking Dh35 million worth for amortisation and Dh15 million for doubtful loans or receiveables outstanding.
"We like the company. It has one of largest net cash per share positions," said Roy Cherry, vice-president, research, at Shuaa Capital in Dubai, which as a "buy" rating on the stock and target price of Dh1.42.
The firm's shares fell as much as 1.2 per cent, but clawed back losses and were trading flat at 9.06am at Dh0.85 a share.
"They will be able to use current market conditions to their advantage by making acquisitions at a prevailing discount and reduce their reliance on Dubai," Cherry added.
Focus
Tabari said that the company's focus would continue to shift to Abu Dhabi and Saudi Arabia from Dubai, which accounted for 45 per cent of revenues in 2009.
Drake made a net profit of Dh41 million in the fourth quarter, according to Reuters calculations after net profit for the year rose 32 per cent.
Deutsche Bank on Wednesday cut Drake's share-price target to Dh1.1 from Dh1.3, citing the faster-than-expected decline in the Dubai construction sector and its fourth-quarter profit miss.
Two analysts in a Reuters poll in January forecast a fourth-quarter profit of Dh77.3 million and Dh87 million respectively.
