Amer Group (Amer) has reported its 4Q16 financial and operational results. Contracted sales continued to be weak, coming in at EGP472mn in 4Q16 and EGP1.4bn in 2016 (-9% Y-o-Y), which we attribute to depleting inventory, following the spin-off of most real estate operations to Porto Group. Reported revenue and margins were weak during the quarter, despite EGP616mn worth of revenue from Porto Vacation Club booked during the year, most of which during the quarter, as this has likely triggered a reversal of revenue from real estate, in our view. Amer’s restaurant and hotel segments performance was weak, on increased costs and seasonality, respectively, while that of the mall segment showed some improvement. Net income was of low quality in 4Q16, with FX gains explaining c72% of the figure. Net income grew 16% Y-o-Y in 2016. Amer’s balance sheet remained highly liquid, with the year closing at a net cash position of EGP454mn, despite the newly-raised debt, which were raised to pay-off part of the land liability on Heliopolis Housing. The board has proposed the distribution of EGP0.02/share (implying a dividend yield of 6.9%), in addition to a share dividend distribution of one share to every 10.   Main positives Strong operating income from the mall segment, with operating income more than doubling to EGP1.3mn (4Q15: EGP0.5mn) and EGP9.2mn in 2016 (2015: EGP3.2mn), despite the weak revenue Further drop in land liabilities to EGP37mn (EGP207mn in September 2016, EGP396mn in December 2015), on the back of repayment of a big portion of the liability on Porto Heliopolis land   Despite the rise in total debt to EGP439mn (+137% Y-o-Y, +46% Q-o-Q), the company continued to hold a net cash balance of EGP454mn, available for investment and/or distribution                                                                                              Main negatives Weakness in contracted sales continued, with EGP472mn reported in 4Q16 (+305% Y-o-Y from low base, -4.4% Q-o-Q). Contracted sales totalled EGP1.4bn in 2016 (-9.3% Y-o-Y), on depleting inventory   Weak revenue in 4Q16, totaling EGP595.3mn (+77.2% Y-o-Y from a low base, -33.1% Q-o-Q) in 4Q16 and EGP2.4bn in 2016 (+32.3% Y-o-Y). The quarter saw a reversal of revenue from property sales likely on a reclassification for the favour of Porto Vacation Club, which totalled EGP616mn for year, mostly booked in 4Q16. Deliveries totalled 1,977 units in 2016 (+18.7% Y-o-Y) Poor performance by the hotel segment. Revenue from the segment was limited to EGP8.7mn (-62.3% Y-o-Y, -90.6% Q-o-Q) in 4Q16 and EGP154.5mn in 2016 (+3.4% Y-o-Y). The segment was loss-making on the operating level in the quarter and was at 9% in 2016, owing to an improved 9M16   Poor performance by the restaurant segment. Revenue came in EGP61.5mn in 4Q16 (+26.1% Y-o-Y, -27.0% Y-o-Y), bringing 2016 revenue to EGP253.2mn (+13.1% Y-o-Y). The segment was loss making on the operating level in both the quarter and year, which management attributed to increased food and operating costs, as well as increased restructuring expenses Gross margin dropped 11pps Y-o-Y to 27.5% in 4Q16 and 4pps Q-o-Q, averaging 29.0% in 2016 (-6pps Y-o-Y). We attribute the weakness to unfavourable delivery mix within the company’s real estate division Weak net income, coming in at EGP34.0mn in 4Q16 (4Q15: EGP54.7mn, 3Q16: EGP71.4mn), c72% of which is explained by FX gains and EGP179.7mn in 2016 [+16.4% Y-o-Y] (Company Disclosure, Sara Boutros, Mai Attia)