Arabtec Holding, the Dubai-listed construction firm, has about Dh4.6 billion in accumulated losses, a Dh1.5 billion rights issue to ready for and a capital reduction plan afterwards. But none come close to being the company’s greatest challenge.

Its greatest challenge to contend with what seems to be market perception, with analysts echoing bearish views on the company’s outlook and the overall construction sector for the medium to long term.

This comes amid challenges across the construction industry, with contractors like Arabtec facing squeezed margins and delayed payment cycles from developers and governments.

“Crude oil price is now at $56 or $57, which is good, but I think you need to see crude at $65 before you get another round of spending in infrastructure, and that is when contractors may start to do better, but until then, it’s basically going to be batting down the hatchets,” said Sanyalaksna Manibhandu, director of research at the National Bank of Abu Dhabi Securities.

For Arabtec specifically, he said he didn’t expect to see growth in the company for at least another two years.

“I think the fact that Aabar Investments [Arabtec’s largest shareholder] is going to effectively underwrite the capital increase means that there is intention for the company to survive. The first thing they need is for the company to sort out its capital structure, and go through another round of restructure, and then one might think about growth but this would take maybe two years before they can look at growth,” Manibhandu said.

He pointed that Arabtec had earlier said it was aiming to break even in 2016, but its losses only widened during the year.

From a technical perspective, analyst Osama Al Ashry said the technical outlook was negative for the medium and long terms. In the short term, however, prices may rebound to above Dh1.

“Share prices dropped nearly 43 per cent in the week after the company announced results … and I expect prices to reach new lows, so I wouldn’t advice investors to buy the stock,” he said.

On Thursday, Arabtec’s share price moved sideways, ending the day 1.14 per cent lower at Dh0.955. The shares were the most actively traded on the Dubai bourse, however, accounting for 27 per cent of the total market trade value.

This was a day after shares jumped 15 per cent as Arabtec announced it had received approval from the market regulator for its recapitalisation plan, which encompasses a rights issue followed by capital reduction.

Al Ashry, a member of UK organisation Society of Technical Analysts, said share prices may see some correction to reach Dh1.07, but will then reach new lows, especially if prices touch the support level of Dh0.79.

“If this support level is broken, we will see prices at Dh0.67 and then Dh0.55, and I think we may see this happening in the next few weeks,” he said.

In a statement to the Dubai bourse on Wednesday, Arabtec said it will release an investor presentation in the coming week to outline the company’s future strategy and current position.