Not bad for a launch-light quarter
- Sales in 2Q19 rose 15.4% y/y and 61.1% q/q to EGP1.4 billion. Sales during the quarter were mainly driven by Villette and Allegria Residences which respectively contributed 28% and 21% to 2Q19 sales.
- Revenue in 2Q19 doubled y/y and rose 14.2% q/q to EGP1.1 billion, resulting from the 25.7% y/y and 19.4% q/q increase in unit deliveries. High-value Villette deliveries contributed the most to 2Q19 revenue with a 44% share.
- GPM decreased y/y and increased q/q to 33.5%, and NPM declined y/y and q/q to 16.3%.
- Net cash slightly decreased from EGP2.5 billion at the end of 1Q19 to EGP2.3 billion at the end of 2Q19.
- Receivables slightly increased from EGP11.4 billion at the end of 1Q19 to EGP11.5 billion at the end of 2Q19.
Still a long way to go
SODIC (OCDI) is targeting FY19 sales of EGP7.2 billion which would imply a 39.2% y/y increase. Our FY19 sales projection of EGP4.3 billion taken into account in our EGP32.36/share valuation does not include sales from Al Yosr and the 500-feddan project given our valuation of these two projects on a NAV basis. With EGP2.3 billion in 1H19 sales, OCDI will need to achieve EGP4.9 billion in 2H19 to realize its FY19 sales target. Even though the company has multiple launches lined up for 2H19 - a new phase in Malaaz using the new masterplan, an apartment phase in SODIC East, the 500-feddan project, and a high-end family unit phase in Al Yosr - we do not expect the company to reach its EGP7.2 billion sales target.
We maintain our Overweight recommendation on OCDI based on our FV of EGP32.36/share.