What's keeping the resignation of Arabtec's billionaire CEO a mystery?
Arabtec recently picked up contracts valued at $40 billion (Dh146.92 billion) in Egypt for social housing and related projects
After the extreme volatility that Arabtec’s share price has been through in recent days, the manner of Hasan Ismaik’s exit as the CEO was quite subdued in its intensity.
A terse statement that he had handed in his resignation but that he will not go into any of the details as to what forced his hand was all that the media could get from Ismaik on a day when Arabtec was holding a board of directors’ meeting. The board immediately confirmed that Mohammad Al Fahim will take over the role of the acting CEO. It was in February last year that Hasan Ismaik took over from Arabtec’s long serving CEO Riad Kamal.
The share had been through a see-saw ride in recent weeks — soaring to Dh9 a share plus and dropping to just over Dh4 in a matter of days. Such a movement is unprecedented in the annals of UAE’s stock markets.
Arabtec closed Wednesday edging up 0.08 fils to Dh4.3 with 16 million shares being traded. Again, after being through a dizzy 38 per cent drop this month, Wednesday’s 1.9 per cent gain would constitute a welcome respite. The share price dropped 48 per cent since its May peak of Dh9.88.
“There’s nothing fundamentally wrong with the company’s operations side — all of the recent rupture was confined to the share price stemming from the undercurrents between its main shareholders,” said a stock broker who has raised his exposure in the scrip further in recent days. “You had Ismaik raising his stake in the group while the main shareholder Aabar then lowered its. Those were the mixed signals that investors were trying to decipher of late — but clarity is still elusive even after Ismaik’s exit.”
Late last month, Arabtec, which has a project order book estimated at Dh200 billion plus, confirmed that Ismaik had raised his personal stake to 21.46 from 8.03 per cent. It has now gone past the 28 per cent mark.
“There was a lot of ‘emotion’ that was pulling the scrip in either direction — as a multiple to earnings, even a Dh4-plus a share looks overpriced,” said an analyst. “Arabtec has picked up big-ticket contracts but these are still in the early stages of their execution. As yet, they have not had time to deliver on the revenue flow. But even then, the order book carries a lot of clout and bodes well for the company in the mid-term.”
One huge plus is that the construction contracts are not confined to one or two markets. Apart from its significant hold in the UAE, Arabtec recently picked up contracts valued at $40 billion (Dh146.92 billion) in Egypt for social housing and related projects. There are exposures in other overseas markets. Over the recent past, the company has also been creating new business lines, such as capabilities to handle big oil and gas projects.
It has also set up a dedicated property company, a role which it highlighted at the recent Cityscape Abu Dhabi event.
As of Wednesday, foreign investors held an 11 per cent plus stake in the company.
“Going forward, it will be interested which way they will be trading in the scrip,” said a broker. “If they buy up, it could be a signal to the market they are comfortable with the Dh4 plus range as a valid level to raise their exposure in the company. Where Arabtec could help in reassuring investors is offer updates on key projects it has now; even further details on the JV they announced with Samsung Engineering would go a long way.”