Deal boosts shares of Egyptian firm Maridive

Strong earnings and a new contract award point to positive momentum for Maridive & Oil Services.

NAEEM Holding, an Egyptian investment bank, increased its price target for Maridive yesterday to US$4.21 a share from $4.10, while maintaining a "buy" rating.

The company's shares, which are denominated in US dollars on the Egypt Stock Exchange, have risen 36 per cent since July. Maridive closed 1.45 per cent higher at $3.55 yesterday.

Maridive was recently awarded a $117 million contract with India's Oil and Natural Gas Corporation, the company's second largest contract after its deal with Saudi Aramco.

Oilfield services companies were hit hard by the global financial crisis, which prompted oil and gas producers to cut spending, although some service companies have recently begun to see new orders.

There has been some concern about Maridive's small backlog of jobs as the Aramco project is due for completion soon, but the recent award shows it is confident that it will be able to attract new business, said Zeinab el Beheiry, an analyst at NAEEM in Egypt.

The company reported net earnings of $25m in the third quarter, up 261 per cent compared with the same period last year, and 130 per cent up on the second quarter this year.

This year's third-quarter revenue increased by 146 per cent compared with the same period last year and by 35 per cent over this year's second quarter, beating the consensus among analysts.

Maridive said its performance in the third quarter was mainly driven by its offshore construction service units on the Aramco project.

Margins for the company also improved in the third quarter against the first and second quarters. This was most likely due to the deployment of two large pipe-laying barges, the Regina 250 and the Maridive Constructor, on the construction phase of the Aramco Manifa contract since July, Ms el Beheiry said.

In September, Maridive announced that Aramco had requested an acceleration of work on the project to complete it by end of next year instead of 2012, which will help speed up revenue recognition, Ms el Beheiry said.

halsayegh@thenational.ae