Egyptian Resorts Company (ERC) released its headline figures for 2Q16:   Revenue came in at EGP5.9mn (2Q15: EGP270.1mn, 1Q16: EGP10.3mn, EFGe: EGP10.8mn). Management indicated that minimal cash payments were received from clients during the quarter, shy of the 25% threshold, required for revenue recognition; hence, weak revenue Revenue recognised in 2Q16 was from non-land sources (rental revenue from shops and hotel apartments, utility income and maintenance revenue), which also showed weakness (-15% Y-o-Y) Gross loss was EGP17.9mn (2Q15: EGP186.2mn, 1Q16: EGP10.2mn)   Net loss was EGP35.0mn (2Q15: 181.4mn, 1Q16: EGP5.2mn, EFGe: EGP13.3mn in net loss) Necessary licences for Sawari is still ongoing, expected in 2H16   We reiterate our view that the stock is offering 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. That said, we note that our valuation will benefit from the EGP devaluation, given that land is valued in USD terms (cUSD119/sqm). We estimate that every EGP0.5 weakening against USD potentially adds c4% to our FV.   Reversal of the decision to withdraw the phase III land would improve the company’s outlook significantly, 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. (Earnings release, Sara Boutros, Mai Attia)   Egyptian Resorts Company: EGP0.82 as of 14 August 2016, Rating: Neutral, FV: EGP0.87 per share, MCap: USD97mn, EGTS EY / EGTS.CA