Earnings Report /
Egypt

Emaar Misr For Development: Q2 19 – One-off expense hits bottom line

    Al Ahly Pharos Securities Brokerage
    5 August 2019

    Donation results in net loss

    • Revenue in 2Q19 decreased 3.4% y/y and increased 57.2% q/q to EGP890.8 million. Deliveries in Marassi, Mivida, and Uptown Cairo respectively contributed 77.1%, 15.9%, and 7.0% to 2Q19 revenue.
    • 2Q19 recorded a net loss of EGP324.3 million, compared to 2Q18 net profit of EGP598.5 million and 1Q19 net profit of EGP418.6 million. The net loss is the result of the EGP878.0 million the company paid as a donation to national projects in April 2019. This figure is only 7.0% of the company’s net cash position at the end of 1Q19; however, its recording in one quarter as a hefty one-off, even amidst the company’s consistent finance income, resulted in the 2Q19 net loss.
    • Margins declined y/y and q/q, with GPM decreasing to 39.6% in 2Q19.
    • Net cash decreased from EGP12.5 billion at the end of 1Q19 to EGP11.4 billion at the end of 2Q19.
    • Receivables, including off-balance sheet receivables, increased from EGP14.6 billion at the end of 1Q19 to EGP15.0 billion at the end of 2Q19.
    • Sales figures were not disclosed as is the case during most of the year.

    Maintain Overweight

    We maintain our Overweight recommendation on Emaar Misr for Development (EMFD) based on our FV of EGP6.06/share. EMFD’s net cash currently constitutes 78.5% of market cap.