Local media has reported the official signing of the Heliopolis Housing’s co-development agreement with SODIC on Thursday. The contract covers a 2.7 million sqm land plot, at New Heliopolis project in El-Sherouk City. The investment cost of the project is estimated at EGP20 billion, inclusive of the land cost, with expected sales revenue at EGP30 billion. The project will be completed over three phases, within 10-13 years. We expect the project to be launched in early 2017, following the completion of the project design and after obtaining the necessary building permits. Pending a confirmation from the companies, the contract set EGP5 billion as the minimum return to Heliopolis, according to local media, in exchange for its land contribution.   Our view: For Heliopolis Housing, the signing of the contract represents yet another major step towards the company’s migration from the original business model towards off-plan sales, and hence, towards faster monetisation of its land bank. In our latest note, we highlighted i) lower land and unit sales, and ii) closure of receivable factoring contracts, as early signs confirming the slow-but-sure migration to this model. The timeliness of the signing of the contract (three months after the receipt of the award, as guided by SODIC’s management), further adds to the positivity of the news, in our view. We reiterate our Buy recommendation on the name, with our FV unchanged at EGP73.1 based on 0.3x 2016e NAV, which offers large upside potential of 82%.   For SODIC, we believe that the news is positive, but not risk-free. We note that the implied minimum cost per sqm is cEGP1,850, which we believe is justifiable, presuming that the land related payments will be linked to construction progress, and thus over 10-13 years. We see some challenges that SODIC might face: i) penetration into a new market segment, the middle-income, which is a major shift in the company’s product offering and would require strategic changes in marketing efforts to penetrate the segment; and ii) competition in the area coming from well-established projects that target the segment, including TMG’s Madinaty project and Capital Gardens of Palm Hills. The current market valuation for SODIC is unjustifiably low in our view, assigning zero value to the company’s planned future projects on its existing land bank, which we believe is ungrounded, given the company’s busy launch pipeline, active pursuit after new land plots, and strong brand name. We reiterate our Buy recommendation on the name. (Al Borsa, Mai Attia, Sara Boutros)       SODIC: EGP6.73 as of 3 March 2016, Rating: Buy, FV: EGP14.52 per share, MCap: USD291 million, OCDI EY / OCDI.CA Heliopolis Housing: EGP40.14 as of 3 March 2016, Rating: Buy, FV: EGP73.11 per share, MCap: USD570 million, HELI EY / HELI.CA