Strong real estate sales and hotel revenue
ORHD achieved strong 2Q22 sales of EGP2.7 billion, up 39.4% y/y and 31.3% q/q, bringing 1H22 sales to ORHD’s highest ever first-half sales of EGP4.7 billion, up 16.9% y/y. Out of 2Q22 sales, O West contributed EGP1.4 billion, up 127.4% y/y, El Gouna contributed EGP1.1 billion, up 8.6% y/y, and Makadi Heights and Byoum contributed EGP157.2 million, down 42.3% y/y due to ORHD deliberately slowing down sales in the destination until the land issue with the Tourism Development Authority was cleared. In 2Q22, the average selling price grew 27.9% y/y to EGP37,916/sqm in O West, 17.3% y/y to EGP69,209/sqm in El Gouna, and 32.4% y/y to EGP41,037/sqm in Makadi Heights and Byoum.
Hotel revenue in 2Q22 reached EGP372.6 million, up 132.1% y/y and 43.0% q/q, driven by an occupancy rate in El Gouna of 72.0%, compared to 33.0% in 2Q21 and 61.0% in 1Q22, and an occupancy rate in Taba Heights of 23.0%, compared to 5.0% in 2Q21 and 10.0% in 1Q22. 2Q22 ARR was stable at EGP1,553 in El Gouna and increased 52.7% y/y to EGP779 in Taba Heights. Foreign tourists represented around 72.0% of occupied hotel space in El Gouna in 2Q22. This brings 1H22 hotel revenue to EGP633.2 million, up 147.6% y/y, putting ORHD on track to achieve our FY22 hotel revenue forecast of EGP1.2 billion projected in our EGP10.77/share valuation.
Real estate revenue increased 5.9% y/y to EGP1.2 billion in 2Q22, supported by accelerated construction, and town management revenue increased 32.3% y/y to EGP299.7 million in 2Q22, supported by destination events, bringing 2Q22 total revenue to EGP1.9 billion, up 23.0% y/y and down 2.4% q/q.
Gross profit in 2Q22 reached EGP631.9 million, up 17.5% y/y and down 7.2% q/q, translating into a GPM of 33.5%, lower annually and sequentially.
Net profit in 2Q22 reached EGP365.9 million, up 32.0% y/y and down 12.9% q/q, translating into an NPM of 19.4%, higher annually and lower sequentially.
Real estate cash collections increased 30.5% y/y to EGP1.4 billion in 2Q22.
Real estate receivables increased from EGP17.2 billion at the end of 1Q22 to EGP18.6 billion at the end of 2Q22.
Net debt increased from EGP594.4 million at the end of 1Q22 to EGP985.5 million at the end of 2Q22.
ORHD plans to finalize the renovation of some of its hotels in El Gouna by 4Q22 to attract higher ARR clients. ORHD also plans to continue expediting the construction of real estate units to mitigate any potential inflationary effect on costs and plans to continue increasing average selling prices across all destinations to absorb any expected escalation in costs. We maintain our Overweight recommendation based on our FV of EGP10.77/share given strong sales performance and solid recurring income.