• Hike in deliveries drives revenue and earnings beat Reported figures were strong, with a hike in deliveries in Marassi and Uptown Cairo (UTC) boosting growth in revenue (EGP1.2bn, +46.3% Y-o-Y, +98.1% Q-o-Q, EFGe: +51.7%) and net income (EGP436.8mn, +25.0% Y-o-Y, +71.6% Q-o-Q, EFGe: +22.8%). Gross profit margin was slightly weaker (36.4%, -12pps Y-o-Y, -420bps Q-o-Q), with pressure coming from lower margins in Marassi. 1H16 revenue was EGP1.78bn (+14.1% Y-o-Y), gross profit EGP672mn (+8.6% Y-o-Y), while net income was EGP691mn (+32.3% Y-o-Y). We estimate revenue at EGP3.65bn (+12.6% Y-o-Y) and net income at EGP938mn (+9.8% Y-o-Y) in 2016e.
• 2Q contracted sales figure is undisclosed, but is indicatively weak We estimate that contracted sales figure was weak, based on the international sales figure disclosed by its parent, Emaar Properties, for the quarter (AED629mn, -47% Y-o-Y, -34% Q-o-Q). This implies cEGP1.5bn (-20.4% Y-o-Y, -6.3% Q-o-Q, -21% vs. EFGe) in new sales to Emaar Misr, assuming 100% of international sales contracted during the quarter came from Egypt – highly unlikely, in our view (71% in 1Q16). Emaar Misr recorded sales of EGP3.9bn in 1H15. We note that Emaar launched a number of new villages across its three projects during the April CityScape conference; however, sales dropped Y-o-Y and Q-o-Q, according to our calculations. We await further clarity from Emaar Misr or its parent on the 1H16 numbers and 2H16 guidance, to be able to revise our contracted sales numbers. Our numbers incorporate EGP10.2bn for 2016e. 
• Attractive upside, but lacks strong conviction, pending more disclosure We have a Buy rating on the name, on an upside potential of 43% to our FV of EGP3.74/share, which we believe may be subject to change, once we have more clarity from management on the YTD operational developments. We believe Emaar Misr’s fundamentals continue to be strong, given: i) its well-located land plots, secured at good prices, and currently carrying limited land liability; ii) the backing of its parent/sister companies, particularly once its ambitious plan for its investment portfolio kicks-off; and iii) its strong balance sheet, which carries room for leverage.

Mai Attia
Sara Boutros