Mohammad Al Mojil to buy 20% of Saudi Massadr
Civil contractor swoops for stake in power and water project firm
Mohammad Al Mojil Group, the civil contractor, is to buy a 20% stake in a Saudi contractor to boost its strength servicing the utilities and energy sectors.
The listed contractor will buy 40,000 shares of Saudi Massadr worth SAR 10 million, after signing an agreement this morning. Saudi Massadr competes for contracts for oil, gas and wastewater projects.
“We’ve looked at the market both locally and regionally and see a good opportunity with this company,” Mohammad Mohsen Al-Harbi, general manager of administration and public affairs told CW this morning.
Saudi Massadr works on the joint basis of constructing and owning assets – known as ‘build, operate, own’ (BOO) deals – and constructing assets before handing them to the end client, known as ‘build, operate, transfer’ (BOT) deals.
MMG’s core focus of operation in the last few years has been the onshore and offshore oil, gas and petrochemical project, and is the only contractor with a license to perform live welding on rigs. But it has recently embarked on an expansion programme that will see it develop its contracting arms that are focused on marine and utilities work.
“We know that the GCC countries are spending on infrastructure such as in water,” added Al-Harbi. “We see from a financial perspective that the deal is good for the company.”
The company last month announced a net loss of SAR 179.5 million for 2010, reversing a net profit of SAR 40.33 million in the previous year.
Last month the company said it would co-run a company based in Abu Dhabi with National Holding, a UAE investment firm, owning 49% of the venture. The company did not reveal any more details about this venture on request this morning.
At the beginning of the year the company won a SAR 197 million contract from Hyundai Engineering & Construction Company for civil engineering work in the UAE capital.
Mohammad Al Mojil shares climbed 3.17% yesterday to SAR 17.9. They have fluctuated between SAR 19.9 and SAR 16.6 since the start of the year, having risen from a company low of SAR 11.95 on 9th November.
Alia El Mehelmy at HSBC Bank recommended an overweight position on the company last month, echoing the position taken by the analysis team at TAIB Securities. Roy Cherry, of Shuaa Capital, recommended ‘sell’ on 2nd November.