• 1H2015/16 numbers confirm migration from original business model The company’s 1H2015/16 results carried two main positive highlights: i) a 44% Y-o-Y drop in revenue from the sale of land and units, which we view as a sign of relief, showing that the company is indeed migrating from its original business model and moving more towards off-plan sales; and ii) the closure of a major receivable factoring contract with a local commercial bank, worth cEGP320 million, which explained the 87% surge in total revenue for the period. A similar transaction worth EGP110 million is said to be underway, according to local media, with closure expected before end of March. We believe the purpose of such transactions is to boost liquidity to finalise the ongoing projects, ahead of further engagement in projects under the new business model.
• Remain buyers of the stock; maintain our FV at EGP73.1/share We reiterate our Buy recommendation on the name, with our FV unchanged at EGP73.1/share based on 0.3x 2016e NAV, which offers an upside potential of 67%. Our 2016e NAV, which is based on a similar land transaction methodology, remains unchanged, in a backdrop of rising demand for land, which continued to push selling prices upwards. We also keep our discount-to-NAV unchanged, at 70%, which we believe fairly captures the level of uncertainty over the timeline for the company’s planned shift in business model. The above developments are positive, but do not yet warrant a lower discount-to-NAV, in our view.
• Awaiting further progress in SODIC’s contract and more announcements of similar agreements The contract for the co-development agreement with SODIC is yet to be signed, with the launch of the project not expected before early 2017. We highlight further progress at this project and announcements of further similar projects, as major triggers for the name. We did not account for the new agreements in our forecasts.

Mai Attia
Sara Boutros