Drake & Scull International PJSC (DSI) has announced that Fujita Corporation has awarded its unit, Drake & Scull Rail (DSR), a QAR340 million contract related to the delivery of the first phase of the Doha Metro Depots. The Fujita Corporation is undertaking the construction of the Red and Green Lines of Doha Metro’s Depots. Under the terms of agreement, DSR will undertake the supply, installation, testing and commissioning of all MEP building services to be provided in both the Depot & Stabling yard pertinent to the Red and Green lines and their associated buildings with a scheduled delivery slated for 2019. Drake & Scull will also be actively involved in the design verification process as a participant in the design review meetings.   The news come in line with management’s strategy to seek rail projects to support margins. Our model assumes a gross profit margin of 9.3% for 2016e and 9.4% for 2017e, while management is targeting 10% in 2016e and further improvements thereafter, which would be attainable through securing similar high-margin rail projects. Management had mentioned that the company is also bidding for packages within the Mecca rail project. Our model assumes AED3.1 billion in new awards for 2016, with the above award representing the first award YTD for DSI. (Company disclosure, Mai Attia, Sara Boutros)