Egyptian Resorts Company (ERC) has released its financial results for 1Q16. Revenue came in at EGP10.3mn (1Q15: EGP29.4mn, 4Q15: EGP74.0mn, EFGe: EGP82mn). Management noted that minimal cash payments were received from clients during the quarter, shy of the 25% threshold, required for revenue recognition; hence, the weak revenue. Revenue recognised in 1Q16 was purely non-land (rental revenue from shops and hotel apartments, utility income and maintenance revenue), which was flat Y-o-Y. Gross loss was unchanged Y-o-Y at EGP10.2mn. EBITDA was EGP20.6mn in 1Q16, vs. EGP4.4mn in 1Q15, both in the red. Net income was EGP5.2mn (1Q15: EGP4.4mn, 4Q15: EGP33.5mn both in net loss, EFGe: EGP82mn). We note that net income was helped by FX gains of EGP23.0mn, on the back of EGP devaluation during the quarter – excluding which ERC’s bottom-line would have been in the red. Our numbers incorporate EGP390mn in revenue and EGP138mn in net income for 2016, assuming a better outlook for the rest of the year, trigging more consistent client payments and thus further recognition of more plots sold in 1H15.   We reiterate our view that the stock offers a less attractive investment opportunity compared to its local peers, given: i) loss of sales momentum seen in 1H15 on the slowdown seen in the Egyptian tourism space discouraging significant investments in the sector; ii) it is a one-project company, with limited residual land bank; iii) nature of its business model, as a master-developer, limiting its ability to fully leverage on increased demand on secondary homes; and iv) its high-risk-profile, in light of its association with the vulnerable tourism segment.   The reversal of the decision to withdraw the phase III land would significantly improve the company’s outlook, even if returned at a higher price. This would multiply ERC’s residual land bank, making the long-term story more compelling and offering higher potential for growth with more room for land sales and development projects. While there are several factors supporting the return of the phase III land plot to ERC, we see no positive signs/indications of a resolution in the short term, after four years from the withdrawal of the land. The return of the land adds EGP1.77/share to our FV, assuming selling prices at USD50/sqm, 50% lower than what we have assumed for phases I and II. (Company disclosure, Mai Attia, Sara Boutros)   Egyptian Resorts: EGP0.82 as of 01 June 2016, Rating: Neutral, FV: EGP0.87 per share, MCap: USD97 million, EGTS EY / EGTS.CA