Earnings Report /

Talaat Moustafa Group Holding: Q1 20 – Already facing Covid-19 pressure

  • Sales pressured in March 2020 when Covid-19 challenges emerged

  • Net profit increased 3.9% y/y but decreased 33.0% q/q

  • We will be revising our sales forecast to account for Covid-19 impact; maintain Overweight, FV EGP17.46/Share

Sales decline on Covid-19 impact

  • Sales in 1Q20 declined 49.6% y/y and 62.3% q/q to EGP2.2 billion. 1Q20 faced pressure during March 2020 when covid-19 challenges emerged and slowed down sales.
  • Revenue in 1Q20 witnessed a slight increase of 5.1% y/y, but declined 42.5% q/q to EGP2.3 billion. We suspect hotel revenue to have declined given the hospitality sector bearing the brunt of the current covid-19 situation.
  • Gross profit in 1Q20 decreased 1.5% y/y and 49.8% q/q to EGP835.9 million.
  • Net profit in 1Q20 slightly increased 3.9% y/y and decreased 33.0% q/q to EGP375.3 million.
  • GPM decreased y/y and q/q to 36.5%, and NPM slightly decreased y/y and increased q/q to 16.4%.

Hitting FY 20 sales target highly unlikely

Talaat Moustafa Group Holding’s (TMGH) FY 20 sales target of EGP20.4bn seems quite far-fetched given the first quarter’s performance and the current challenging situation. We are revising our FY 20 sales forecast of EGP19.3 billion down to take into account the pressure being faced by the real estate sector. Maintain Overweight; FV EGP17.46/Share