Drake & Scull Secures AED 1 Billion Arabian Hills Contracts
Drake & Scull International PJSC has secured two major contracts in the Arabian Hills project, valued over AED 1 billion.
Summary
Drake & Scull International PJSC announced the acquisition of two key contracts in the Arabian Hills project, with a projected profit margin of 8-10%.
Drake & Scull International PJSC (DSI), a prominent player in the UAE's construction and engineering sector, has recently announced a significant milestone by securing two major contracts for the Arabian Hills project. With a combined value exceeding AED 1 billion, this development marks a substantial addition to the company's portfolio.
The company disclosed that the financing for these contracts will be managed through its internal cash resources and existing bank facilities, showcasing a robust financial strategy. This approach not only underscores DSI's financial health but also its strategic foresight in managing large-scale projects.
The Arabian Hills project is expected to generate a profit margin in the range of 8% to 10%. Revenue recognition will be based on the percentage of completion, a common practice in the industry that allows for a more accurate reflection of financial performance over the project's lifecycle. The anticipated completion and handover of the project are scheduled for the end of 2027, indicating a well-planned timeline that aligns with the company's strategic goals.
Given the scale and scope of the Arabian Hills project, this development is likely to bolster DSI's standing in the regional market. However, investors should remain cautious and monitor the company's execution capabilities and financial health closely. The construction and engineering sector is often subject to external economic factors, which can impact project timelines and profitability.
In light of these developments, stakeholders might consider a 'hold' position on DSI's stock. While the new contracts signal potential growth, the inherent risks and long timeline suggest a cautious approach. The company's commitment to transparency and regular updates on project developments will be crucial for investor confidence in the coming years.
Source
Summary
Drake & Scull International PJSC issued a clarification regarding their recent disclosure about winning two major contracts in the "Arabian Hills" project, valued at over AED 1 billion. The project will be financed through the company's cash resources and available bank facilities. They anticipate a profit margin between 8% and 10%, with revenues recognized based on the completion percentage during the project's execution. The project is expected to be completed by the end of 2027. The company will continue to update shareholders on the project's progress in line with disclosure regulations.
