DFM gained 1.18 per cent and ADX closed by 1.75 per cent up for the week ended March 18.
The top gainers this week are Abu Dhabi National Company for Building Materials (41.61 per cent), Abu Dhabi National Takaful (9.09 per cent), Dubai Investments (7.38 per cent), Dana Gas (7.29 per cent) and Eshraq Investments (6.65 per cent).
The global dredging industry is a large one, and National Marine Dredging Company of Abu Dhabi, with a market capitalization of Dh5.77 billion and a dividend yield of 3.57 per cent, is an exciting company in this space. In 2020, its board approved the acquisition of the entire shareholding of NPCC in exchange for shares in NMDC.
The transaction has received regulatory approval, effective from February 11. The purchase is part of NMDC's strategy to transform from its current marine-focused model into a fully integrated EPC contractor with civil construction capabilities beyond marine. This transformation is essential as only large companies that derive benefit from economies of scale can survive.
A case in point is the Nigerian dredging industry, where there were too many small companies which could not pose any challenge to European companies, especially for bigger projects. As a result, many closed their operations. It is worth noting European companies, mainly Dutch and Belgian, dominate the dredging market.
Best course possible
So, the NMDC strategy of scaling up operations and becoming a dominant player in the Middle East is the right approach.
Having a strong UAE company in the dredging industry is strategically important. Dredging is an essential tool to mitigate climate change's profound effect and satisfy the ever-increasing need for land for rapid urbanization. From a UAE perspective, dredging will help create depths at harbours, create/maintain fishing harbours, and marinas and reclamation of land to build urban infrastructures in coastal cities.
Oil platforms and oil rigs also need the services of a dredging company. The industry has the potential to become a significant economic driver - and employer.
Projects to show
Last year, NMDC revenues stood at Dh3.77 billion, 34 per cent higher than in 2019. Net profit of Dh352 million came from an increase of 94 per cent over the 2019's Dh181 million. Large projects such as Hail and Ghasha Artificial Islands construction, Khalifa Port South Quay Development and Foreshore Works, Manzalah Lake and Alexandria QW-55 reclamation projects in Egypt. and the receipt of final settlement against a significant claim in Bahrain were the primary drivers of revenue increase.
NMDC owns the most extensive portfolio of dredging assets in UAE, consisting of 19 dredgers with capacities ranging from 1,795 KW to 20,725 KW, including two Trailing Suction Hopper Dredgers with capabilities of 6,000- and 8,000 cubic metres.
The dredgers are supported by tugs and multicat crafts and assisted by A-Frame and barges. NMDC took delivery of its first TSHD (Trailing Suction Hopper Dredger) 'Arzana' in March 2018, and the second in August last. These newbuilds are strategic additions to the fleet. They are specifically designed to work in areas such as the Arabian Gulf and other regions with similar operating conditions.
NMDC's strategy of expanding into new markets should be rewarding for its shareholders in the long run.