Sales surge annually and sequentially
- Sales in 4Q19 surged 96.7% y/y and 110.7% q/q to EGP5.9 billion, bringing FY19 sales to EGP20.4 billion, 15.0% lower than the company’s FY19 sales target and down 4.2% y/y, mainly due to FY18 having included the EGP1.0 billion sale of four schools, compared to the EGP0.3 billion sale of one school in FY19.
- Revenue in 4Q19 witnessed a slight dip of 3.2% y/y, but rose 41.4% q/q to EGP4.0 billion.
- Gross profit in 4Q19 increased 1.9% y/y and 69.4% q/q to EGP1.7 billion, and net profit in 4Q19 increased 8.2% y/y and 12.1% q/q to EGP560.1 million.
- GPM increased y/y and q/q to 41.8%, and NPM increased y/y and decreased q/q to 14.1%.
- Board of Directors proposed the distribution of EGP0.18/share cash dividends, implying a DY of 2.3%.
Targeting stable sales in FY20
Talaat Moustafa Group Holding (TMGH) is targeting FY20 sales similar to FY19 sales of EGP20.4 billion, in line with the trend seen across the real estate sector this year with most companies targeting flat growth in FY20. Our EGP17.46/share valuation assumes a FY20 sales forecast of EGP19.3 billion.
We maintain our Overweight recommendation of TMGH based on our FV of EGP17.46/share, which is mainly supported by the company’s commercial portfolio, which constitutes 56.5% of our total valuation.