Earnings Report /
Egypt

Orascom Development Egypt: 3Q22 | Solid Sales and Impressive Top and Bottom Lines

  • 3Q22 sales reached EGP2.6 billion, up 17.0% y/y and down 2.2% q/q, bringing 9M22 sales to EGP7.3 billion, up 16.9% y/y.

  • Hotel revenue in 3Q22 grew 64.2% y/y and 19.0% q/q to EGP443.3 million, driven by occupancy rate in El Gouna of 77.0%.

  • Net profit in 3Q22 increased 37.3% y/y and 63.1% q/q to EGP596.8 million.

Al Ahly Pharos Securities Brokerage
14 November 2022

Solid real estate sales and stellar top and bottom lines

  • ORHD achieved solid 3Q22 sales of EGP2.6 billion, up 17.0% y/y and down 2.2% q/q, bringing 9M22 sales to EGP7.3 billion, up 16.9% y/y. Out of 3Q22 sales, O West contributed EGP1.1 billion, up 15.0% y/y, El Gouna contributed EGP1.2 billion, up 19.9% y/y, and Makadi Heights contributed EGP304.9 million, up 12.6% y/y. In 3Q22, average selling price grew 21.4% y/y to EGP38,251/sqm in O West, 19.3% y/y to EGP71,133/sqm in El Gouna, and 19.1% y/y to EGP36,827/sqm in Makadi Heights.

  • Hotel revenue in 3Q22 grew 64.2% y/y and 19.0% q/q to EGP443.3 million, driven by an occupancy rate in El Gouna of 77.0%, compared to 52.0% in 3Q21 and 72.0% in 2Q22, and an occupancy rate in Taba Heights of 52.0%, compared to 21.0% in 3Q21 and 23.0% in 2Q22. 3Q22 ARR increased 3.3% y/y to EGP1,644 in El Gouna and increased 67.7% y/y to EGP1,003 in Taba Heights. Foreign tourists represented around 72.0% of occupied hotel space in El Gouna in 3Q22 and 78.0% in 9M22. This brings 9M22 hotel revenue to EGP1.1 billion, up 104.8% y/y, putting ORHD comfortably on track to exceed our FY22 hotel revenue forecast of EGP1.2 billion projected in our EGP10.77/share valuation.

  • Real estate revenue increased 49.7% y/y to EGP2.1 billion in 3Q22, and town management revenue increased 37.1% y/y to EGP346.0 million in 3Q22, bringing 3Q22 total revenue to EGP2.9 billion, up 50.1% y/y and 51.8% q/q, and 9M22 total revenue to EGP6.7 billion, up 36.3% y/y.

  • Gross profit in 3Q22 increased 63.2% y/y and 73.4% q/q to EGP1.1 billion, translating into a higher GPM of 38.3%.

  • Net profit in 3Q22 increased 37.3% y/y and 63.1% q/q to EGP596.8 million, translating into an NPM of 20.8% and bringing 9M22 net profit to EGP1.4 billion, up 23.4% y/y.

  • Real estate cash collections increased 32.0% y/y to EGP1.5 billion in 3Q22.

  • Real estate receivables increased from EGP18.6 billion at the end of 2Q22 to EGP19.3 billion at the end of 3Q22.

  • Net debt increased from EGP985.5 million at the end of 2Q22 to EGP1.0 billion at the end of 3Q22.

Maintain Overweight

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 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 given solid sales performance and strong recurring income.