Goldman Sachs fair value Arabtec Aldar Sorouh

[Cash King]

Khaleej Times 13 June 2009:

Goldman Sachs Raises Target Price for Arabtec, Aldar and Sorouh By Rocel Felix DUBAI — Goldman Sachs has raised its target price for Arabtec Holding (ARTC), the country’s largest construction company, and two Abu Dhabi-based property companies, Aldar Properties (ALDAR) and Sorouh Real Estate (SOROUH). Arabtec Holding’s price target was raised by 6 per cent to Dh3.77. Goldman Sachs cited the improving regional economic outlook due to higher oil prices, and changes in order book and margin assumptions following recent management updates. “We remain positive on the outlook for construction activity in the region as recent firmness in oil prices should provide further support to the construction activity. We believe Arabtec is well positioned to benefit from this trend given its strong market position and track record.” Goldman Sachs said Arabtec’s recent order book reassessment also reduces the risk of further cancellations. “Arabtec’s latest order book update put its backlog at Dh28.2 billion as against Dh39 billion at the beginning of the year. The reduction in order book was driven by management’s conservative approach of reclassifying all projects that were either delayed or cancelled or those that posed a risk of delay and/or cancellation as suspended. We believe this lends credibility to the remaining order book of Dh28.2 billion.” It said though that about 35 per cent of Dh28.2 billion book order is accounted for by a single project in Russia worth Dh10 billion. “Arabtec management is quite optimistic about the project coming through and given its nature and the likely backing by the Russian government, we believe the project is more likely to be delayed than cancelled.” The price target for Aldar Properties, Abu Dhabi’s biggest property company was raised to Dh4.7 from Dh4.34, and on Sorouh to Dh3.91 from Dh2.98, as it changed its valuation method to incorporate net asset value. — rocel at khaleejtimes.com