Edison Issues Update on Palm Hills Developments (PHDC)

The continued strength of the Egyptian residential property market has supported strong Q3 sales for Palm Hills and further residential project launches to come in Q416 are expected to keep the sales pipeline full in the medium term. Commercial real estate has contributed 10% to net profit over the year so far, a growing share of which is now recurring, and three commercial construction projects are due to be completed in FY17. Management plans to securitise up to EGP2.5bn of receivables to help accelerate construction and possibly to repay the syndicated loan earlier than scheduled. We have decreased our 2016 EBIT forecasts to reflect the accounting changes and delivery mix; our overall valuation is only slightly lower due to the reduced scope of three residential projects.

     (Logo: http://photos.prnewswire.com/prnh/20130417/608168 )

We maintain our previous valuation approach, where we take Q316 reported NAV of EGP2.58 per share and add the potential uplift of EGP1.81 (unchanged) in valuation of undeveloped land and the hotel assets, and then add the NPV of future profits from residential development of EGP1.33 (was 1.60). The decrease in the last component is due to the reduced scale of certain projects and using a slightly higher discount rate. The resulting total valuation is EGP5.73 (was EGP6.14).

Click here to view the full report.

All reports published by Edison are available to download free of charge from its website www.edisoninvestmentresearch.com.

About Edison: Edison is an international equity research firm with a team of over 70 analysts, investment and roadshow professionals and works with both large and smaller capitalised companies, blue chip institutional investors, wealth managers, private equity and corporate finance houses to support their capital markets activity. Edison provides services to more than 420 retained corporate and investor clients from offices in London, New York, Frankfurt, Sydney and Wellington. Edison is authorised and regulated by the Financial Conduct Authority.

Edison is not an adviser or broker-dealer and does not provide investment advice. Edison's reports are not solicitations to buy or sell any securities.

Contact details: Learn more at www.edisongroup.com and connect with Edison on:  

   
    LinkedIn www.linkedin.com/company/edison-investment-research
    Twitter  www.twitter.com/Edison_Inv_Res
    YouTube  www.youtube.com/edisonitv
    Google+  https://plus.google.com/105425025202328783163/posts

For more information please contact:

Julian Roberts, Edison Investment Research, +44 (0)20-3077-5748
Andrew Mitchell, Edison Investment Research, +44 (0)20-3077-5700, financials@edisongroup.com

SOURCE Edison Investment Research