Dubai-based Real estate contractor Drake and Scull International (DSI) was one of the only companies which hired when others laid off staff at the height of the global crisis, while DSI shares are some of the only securities which outperformed the DFM General Index during the last six months. AMEinfo.com takes a look at the strategy of DSI CEO Khaldoun Tabari.
Khaldoun Tabari, vice chairman and CEO of Drake and Scull International (DSI), is not one to mince his words. "There is no democracy in the construction market. This is war," he reveals, describing the intensity of competition in his branch. Speaking at the The Big 5 Conference, Tabari gave some insights on how he steered his company through the most challenging economic times since the 1930s.
Key to surviving the financial crisis
Tabari believes that even before the crisis took its toll on the United Arab Emirates' construction sector, the key to survive was by expanding first out of the country and then beyond the region.
"Today, we are truly international. The I in DSI is not cosmetic. As a pioneer MEP contractor from Dubai, DSI runs operations in the UAE, Saudi Arabia and all other GCC states, India, Thailand, Nigeria and China, among other markets," Tabari explains. Outside the GCC, DSI offices exist in Syria, Egypt and Jordan. The firm has been awarded 22 projects since the beginning of 2010, and the combined value of projects won reached Dhs2.8bn ($76.35m). Prominent ongoing projects are the MEP works on Infinity Tower in Dubai and at the Saadiyat Beach Apartments.
Economic downturn affected profits, but not investors
The crisis weighed on DSI's profits significantly. During the third quarter 2010, DSI's net profit fell 45%to Dhs34.1m in net profit for the three months to September 30, 2010; down from Dhs62.3m the previous year. Nevertheless investors don't seem to have been put off. DSI shares, which were listed 18 months ago as the first MEP contractor on the Dubai Financial Market (DFM), gained 9.20% to close at Dhs0.95 (as of the close of trading on November 30th 2010). The DFM General Index gained 8.2% during the same time. Market bellwether Emaar Properties advanced 6.16%.
DSI's price earnings ratio stands at 7.83, according to DFM Data, which is lower than the real estate and construction sector (11.15). Its dividend yield of 7.36% is also attractive as the majority of 64 DFM listed shares do not pay dividends in 2010. From a technical point of view, however, DSI is struggling with a key resistance line at one Dirham.
Tabari identifies his management principles as follows: "First of all, you have to stay lean, whichever market you go to. Secondly, you must be clear on your objectives. And last but not least, you must have no doubt on what you are doing."