In its latest report, HC Securities & Investment has provided insights into the Egyptian construction sector, particularly regarding Orascom Construction, Invest-Gate reports.
The report anticipates a continued improvement in adjusted operating margins for the company, driven by strategic project management and favorable market conditions.
Nesrine Mamdouh, Industrial Sector Analyst at HC, noted that construction spending in Egypt is expected to return to normal levels. This shift is largely due to a significant decline in public investment, which accounted for approximately 36% of total investment in the first half of FY24/25—a decrease of about 22 basis points from the average of the past three years.
Despite this decline, Mamdouh emphasized that government investment will maintain a base level, particularly in strategic infrastructure projects related to transportation, water, and electricity interconnection.
The report also expresses optimism for local and foreign private investment in Egypt, especially in mega projects, renewable energy initiatives, and industrial ventures. Regarding the Ras El Hekma project, HC believes Orascom is well-positioned to secure a substantial share of contracts, bolstered by a clearer vision following the completion of the master plan by Modon Holding.
Looking ahead, HC expects an improvement in collections from ongoing projects in Egypt by FY25/26, supported by an enhanced ratio of government revenues to GDP, as per IMF estimates released in April 2025.
Shifting focus to the Gulf Cooperation Council (GCC) region, the report indicates that the volume of projects under development is projected to reach $2.7 tn, with contracts worth $235 bn anticipated to be awarded in the next six to twelve months.
Saudi Arabia is expected to account for around 63% of these contracts, while the UAE will contribute approximately 20%, primarily in construction, transportation, and energy sectors. However, potential budget pressures due to lower oil prices, projected at around $63 per barrel in 2025 and 2026, may necessitate increased borrowing and private investment to sustain construction activity.
HC remains confident in the construction momentum in the GCC, citing the region’s economic diversification efforts and Orascom’s proven expertise in executing infrastructure projects. The company is actively bidding on various tenders and aims to increase its backlog contribution from the GCC, particularly in light of reconstruction opportunities and a moderate pace of new contract awards in Egypt.
Mamdouh concluded her analysis with projections for Orascom Construction’s financial growth. The report estimates the company’s EBITDA to grow at a compound annual growth rate (CAGR) of 11% from 2025 to 2029, with an average backlog of $8.0 bn during the same period. Revenue growth is expected to average a CAGR of 5.4%, supported by improved project execution and higher-quality contracts.
The report projects that consolidated EBITDA will continue to grow, with adjusted operating margins benefiting from better cash flow management and contributions from existing concessions.