|
|
Arabtec Holding
|
|
|
Balance Sheet Health Improves But Seeking Additional Catalysts; Reduce to Market Perform
• ARTC reported 3Q 09 turnover of AED 1.65bn, slightly below (~2.5%) our estimate. Revenue decline of 19% qoq and 27% yoy is not surprising in the currently stressed business environment.
• Despite tough market conditions and aggressive competition, ARTC reported gross income of AED 276mn (gross margin 3Q 09 ~16.6% slightly down from that of 2Q 09 ~ 17.4%) and net income of AED 166.6mn reflecting net margin of 10.05%, an improvement from 8.9% in 2Q 09 due to lower SG&A and finance costs. The 9mo 2009 net margin (~9%) is in line with management’s guidance of 8-9%.
• We believe cash strength and balance sheet health are the key factors for this business in the current market environment. Cash and equivalents gained 21% qoq to be AED 658mn in 3Q 09 from AED 542mn in 2Q09. Meanwhile, the AED 1bn gap between receivables and payables outstanding at end of FY 08 has been eliminated and at end of 3Q 09 the receivables seem to nearly level out the payables at ~AED 4.6bn. Considering that- 1) the cash position and working capital cycle are improving reasonably and 2) dependency on short term debt has declined (AED 772.5mn down from AED 937mn in 2Q and AED 1.3bn in 1Q); we feel Arabtec should be well positioned to deal with the strained business environment.
Click here to download the complete report
|
|
|
|
|
 |
 |
|
|
|
|
|
|
|
|
|
 |
|
|
|
|
|
|
|
 |
|
|
|
| Asia |
Europe |
Americas |
|
|
|
All data at market close |
|
|
|
|
 |
|
|
|
|
|
|
|