Earnings Report /
Egypt

Palm Hills Developments: 1Q22 – Strong start to the year

  • PHDC achieved impressive 1Q22 sales of EGP5.5 billion, up 62.4% y/y and 25.5% q/q

  • Revenue in 1Q22 grew 46.8% y/y and 59.2% q/q to EGP2.9 billion

  • Net profit in 1Q22 increased 44.1% y/y and 56.2% q/q to EGP295.0 million

Impressive sales growth

  • PHDC achieved impressive 1Q22 sales of EGP5.5 billion, up 62.4% y/y and 25.5% q/q, driven by growth in the number of units sold and an increase in average selling prices across all projects. Sales growth was mainly supported by growth in Badya sales (up 306.9% y/y to EGP1.9 billion in 1Q22) and in Palm Hills New Cairo sales (up 130.1% y/y to EGP1.2 billion in 1Q22). Out of 1Q22 sales, residential sales contributed EGP4.7 billion and commercial sales contributed EGP853.0 million.

  • Construction spending amounted to EGP930.0 million in 1Q22, compared to EGP681.0 million in 1Q21, in keeping with the company’s plan to increase construction spending to hedge against any future cost inflation.

  • Ready-to-move inventory stood at EGP3.8 billion at the end of 1Q22.

  • Revenue in 1Q22 grew 46.8% y/y and 59.2% q/q to EGP2.9 billion as a result of the rise in sales, the contribution of ready-to-move unit sales, and the 7.8% y/y increase in unit deliveries to 371 units.

  • Gross profit in 1Q22 grew 27.3% y/y and 69.2% q/q to EGP918.3 million, translating into a GPM of 31.6%, lower y/y due to a lower-margin delivery mix.

  • Net profit in 1Q22 increased 44.1% y/y and 56.2% q/q to EGP295.0 million, giving way to an NPM of 10.2%, slightly lower y/y and q/q.

  • Receivables increased from EGP22.8 billion at the end of 4Q21 to EGP24.9 billion at the end of 1Q22.

  • Net debt decreased from EGP345.6 million at the end of 4Q21 to EGP333.4 million at the end of 1Q22.

Maintain Overweight

With 1Q22 sales of EGP5.5 billion, PHDC is on track to meet our FY22 sales forecast of EGP18.2 billion projected in our EGP3.37/share valuation. We remind you that PHDC is targeting FY22 sales of over EGP20.0 billion. We maintain our Overweight recommendation given strong sales momentum.