DSI now Sharia compliant

Saleh Muradweij is executive director of civils

Drake & Scull International (DSI) PJSC is now on the list of Shari’a compliant companies. CFO Khaled Jarrar said this move was very important to the company and its relationships with investors. “We have taken necessary action to ensure that DSI observes these fundamental values that are important to ourselves and our investors.”

In other developments, Al Mal Capital has retained its ‘outperform’ rating on DSI following its recent announcement that its second-quarter net profit grew 15% from the previous quarter. “DSI reported good organic top line growth and better-than-expected margins. It has virtually negligible debt and a cash balance of over AED1 billion (US$272 million) from unused initial public offering (IPO) funds,” said Al Mal Capital in a note to clients.

Al Mal Capital commented that, if Gulf Technical Construction Company (GTCC), the civil contracting subsidiary of DSI, continues to secure orders, this will produce a recurring revenue stream in the near-term. At present MEP services accounts for 48% of DSI’s backlog, while infrastructure, water and power (IWP) accounts for 38%.

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“Diversification will not only enhance its backlog mix, but also strengthen the long-term profile of the company. For the period from November 17 to June 30, the IWP segment had experienced the highest gross margin of 20%, followed by MEP at 17.5% and civil at 9.6%,” noted Al Mal Capital.