Earnings Report /
Egypt

MNHD: 1Q20 – land plot sale to the rescue

  • Sales were boosted by the sale of a land plot.

  • Margins were lower y/y and q/q.

  • We expect FY20 sales to decrease by around 35.0% y/y.

Sale of land plot boosts Madinet Nasr for Housing and Development in 1Q20

  • Sales in 1Q20 reached EGP2.5 billion, up 47.1% y/y and down 9.6% q/q. The sale of the 0.1 million sqm residential land plot in Taj City that the company had announced on March 5, 2020, contributed the most to 1Q20 sales with EGP1.1 billion.
  • The land plot sale also resulted in the jump in 1Q20 revenue to EGP914.9 million, up 44.3% y/y and up 20.1% q/q.
  • Gross profit in 1Q20 grew 23.3% y/y and 2.5% q/q to EGP582.5 million, translating into a GPM of 63.7%, lower than its 1Q19 and 4Q19 counterparts of 74.5% and 74.6%, respectively.
  • Net profit in 1Q20 increased 14.4% y/y and 2.7% q/q to EGP380.1 million, implying a NPM of 41.5%, lower than its 1Q19 and 4Q19 counterparts of 52.4% and 48.6%, respectively.

We expect lower y/y sales in FY20

Even though Madinet Nasr for Housing and Development (MNHD) had a good head start with a solid 1Q20, we believe FY20 sales will be pressured by covid-19 challenges and could end up being around 35.0% lower than the company’s FY19 sales of EGP6.3 billion. We are revising our assumptions in our valuation, which is based on land monetization through land plot sales, to reflect slower monetization of land.