Earnings Report /

Talaat Moustafa Group Holding: 2Q19 – Holding its own against a strong 2Q18

    Al Ahly Pharos Securities Brokerage
    7 August 2019

    Solid sales continue

    • Sales in 2Q19 reached EGP7.3 billion, down 26.9% y/y and up 65.3% q/q. Sales performance was supported by the launch of Privado, a Madinaty-based high-end gated community of apartments, which generated over EGP4.0 billion in sales within three weeks. The annual decline in 2Q19 sales followed a strong base, with 2Q18 having witnessed the launch of Celia, with the novelty of its location rendering it a massive launch, and 2Q18 having included EGP1.0 billion in school sales.
    • Revenue in 2Q19 increased 14.7% y/y and 20.5% q/q to EGP2.7 billion.
    • GPM decreased y/y and q/q, and NPM decreased y/y and increased q/q.

    On track to meet its target

    Talaat Moustafa Group Holding (TMGH) is targeting FY19 sales of EGP24.0 billion, which would imply a 12.7% increase compared to FY18 sales and a 32.7% gap above our FY19 sales projection taken into account in our EGP17.90/share valuation. With EGP11.7 billion in 1H19 sales, TMGH seems right on track to achieve its FY19 target.

    Maintain Overweight

    We maintain our Overweight recommendation of TMGH, which 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.