Equity Analysis /
Egypt

Talaat Moustafa Group Holding: Q1 19: Good start to the year

    Impressive sales performance

    • Sales in Q1 19 surged 50.5% yoy and 47.0% qoq to EGP4.4bn, with Madinaty being the biggest contributor, followed closely by Celia.
    • Revenue in Q1 19 reached EGP2.2bn, up 38.9% yoy and down 45.5% qoq from a delivery-heavy Q4 18.
    • Margins declined yoy and rose qoq.

    Better quarters coming up

    Talaat Moustafa Group Holding (TMGH) is targeting FY 19 sales of EGP24.0bn, which would imply an increase of 12.7% compared with FY 18 sales and a 32.7% gap above our FY 19 sales projection (taken into account in our EGP17.90/share valuation). Despite a fantastic Q1 19, TMGH will need to achieve bigger sales numbers in the coming quarters to reach its FY 19 sales target, which it plans to do through its mid-2019 launch of a new gated community within Madinaty that offers apartments at premium pricing to TMGH’s other projects.

    Maintain Overweight

    We maintain our Overweight recommendation of TMGH. It continues to be one of our two top picks in the sector, based on our FV of EGP17.90/share, mainly supported by the company’s Madinaty-based commercial portfolio, which forms 71.1% of our total valuation.