Earnings Report /
Egypt

SODIC: 2Q22 – Sales boosted by the North Coast

  • OCDI achieved solid 2Q22 sales of EGP2.9 billion, up 53.9% y/y.

  • Net cash collections reached EGP1.6 billion in 2Q22 compared to EGP1.3 billion in 2Q21.

  • Margins declined due to an unfavorable delivery mix.

Al Ahly Pharos Securities Brokerage
27 July 2022
  • OCDI achieved solid 2Q22 sales of EGP2.9 billion, up 53.9% y/y and down 21.4% q/q, bringing 1H22 sales to EGP6.7 billion, up 77.4% y/y. Sales performance was mainly supported by North Coast project, June, which generated 43.0% of 2Q22 sales.

  • Sales cancellation rate reached 10% of sales in 2Q22, unchanged from 10% in 2Q21 and 10% in 1Q22. Sales cancellation rate continued to be affected by the 500 feddan project’s temporary suspension. Excluding this effect would yield a sales cancellation rate of 3%.

  • Net cash collections reached EGP1.6 billion in 2Q22 compared to EGP1.3 billion in 2Q21.

  • Construction spending in 2Q22 amounted to EGP661.0 million, compared to EGP705.0 million in 2Q21 and EGP634.0 million in 1Q22.

  • Revenue grew 50.9% y/y and 30.1% q/q to EGP1.5 billion in 2Q22 on the back of an increase in number of unit deliveries. East Cairo projects constituted 80.0% of the quarter’s delivered value.

  • Gross profit in 2Q22 reached EGP437.0 million, up 18.1% y/y and down 13.1% q/q, leading to a lower GPM of 28.3% due to deliveries of the first phases of SODIC East, given early phases of a project generally carry lower margins.

  • Net profit in 2Q22 reached EGP65.0 million, down 46.7% y/y and 71.2% q/q, translating into a lower NPM of 4.2% due to the aforementioned unfavorable delivery mix.

  • Net debt increased from EGP526.0 million at the end of 1Q22 to EGP889.0 million at the end of 2Q22.

  • Receivables, including off-balance sheet receivables, slightly increased from EGP21.2 billion at the end of 1Q22 to EGP21.4 billion at the end of 2Q22.

Maintain Overweight

With 1H22 sales of EGP6.7 billion, OCDI is well on its way to reach our FY22 sales forecast of EGP11.5 billion projected in our EGP20.02/share valuation. OCDI is targeting FY22 sales of EGP14.0 billion. We maintain our Overweight recommendation given solid sales and delivery performance.