09-Aug-2017
Medinet Nasr Housing - 2Q17 results: Weak contracted sales, as expected, due to no new project launches
Rating: Buy
Target Price: EGP14.2
Closing Price: EGP11.1
Decent contracted sales, in light of absence of new launches
Medinet Nasr released its 2Q17 headline numbers yesterday, reporting contracted sales of EGP577mn (1Q17: EGP1.84bn on the back of Sarai II launch, 2Q16: EGP286.6mn, EFGe: EGP600mn). This brings 1H17 total sales to EGP2.4bn, up almost five-fold Y-o-Y. Contracted sales in Jul-17 came in at EGP210mn, according to its earnings release, bringing the total contracted sales figure YTD to EGP2.6bn, all in Sarai. While the 2Q17 sales figure was on the low side, we view it positively, in light of the absence of new project launches. We note that a new launch is planned in 3Q17 at Taj City (worth EGP1.5bn), which should help it approach its 2017 sales target of EGP5bn and our estimate for the year of EGP4.7bn (both figures exclude the company’s share in sales at Capital Gardens).
Weak reported numbers in line with low contracted sales figure
2Q17 revenue came in at EGP410.2mn (+38.7% Y-o-Y, -45.4% Q-o-Q), bringing 1H17 revenue to EGP1.16bn (+117.7% Y-o-Y), with the sequential drop attributed by management to the absence of new launches, given that the company recognises the land components of all units upon sale. This has also relatively pressured gross profit margin, which still continues to be strong (47.7% in 2Q17, down from 59.0% in 2Q16 and 79.4% in 1Q17; 1H17 GPM was 68.2% on a strong 1Q17 vs. 54.7% in 1H16). Net income came in at EGP104.2mn (+36.2% Y-o-Y, -74.3% Q-o-Q), bringing 1H17 net income figure to EGP509.6mn (+257% Y-o-Y). The quarter saw delivery of 120 units, bringing the total to 146 units in 1H17. We forecast EGP2.5bn in revenue and EGP1.1bn in net income for 2017, with a gross profit margin at 66.6%. The company is yet to report its full statements for 2Q17.
Reiterate Buy rating: good story, attractive valuation
We have a Buy rating on Medinet Nasr Housing, on roughly 30% upside. We favour the company’s low cost, undisputed and prime-located land bank, which will continue to appreciate in value, in our view, in a backdrop of high-inflationary environment and increased scarcity of well-located land plots. Moreover, its efforts to unlock the value of its land bank by launching new projects gives us comfort with regards to the speed of value monetisation.
Mai Attia
Sara Boutros
Target Price: EGP14.2
Closing Price: EGP11.1
Decent contracted sales, in light of absence of new launches
Medinet Nasr released its 2Q17 headline numbers yesterday, reporting contracted sales of EGP577mn (1Q17: EGP1.84bn on the back of Sarai II launch, 2Q16: EGP286.6mn, EFGe: EGP600mn). This brings 1H17 total sales to EGP2.4bn, up almost five-fold Y-o-Y. Contracted sales in Jul-17 came in at EGP210mn, according to its earnings release, bringing the total contracted sales figure YTD to EGP2.6bn, all in Sarai. While the 2Q17 sales figure was on the low side, we view it positively, in light of the absence of new project launches. We note that a new launch is planned in 3Q17 at Taj City (worth EGP1.5bn), which should help it approach its 2017 sales target of EGP5bn and our estimate for the year of EGP4.7bn (both figures exclude the company’s share in sales at Capital Gardens).
Weak reported numbers in line with low contracted sales figure
2Q17 revenue came in at EGP410.2mn (+38.7% Y-o-Y, -45.4% Q-o-Q), bringing 1H17 revenue to EGP1.16bn (+117.7% Y-o-Y), with the sequential drop attributed by management to the absence of new launches, given that the company recognises the land components of all units upon sale. This has also relatively pressured gross profit margin, which still continues to be strong (47.7% in 2Q17, down from 59.0% in 2Q16 and 79.4% in 1Q17; 1H17 GPM was 68.2% on a strong 1Q17 vs. 54.7% in 1H16). Net income came in at EGP104.2mn (+36.2% Y-o-Y, -74.3% Q-o-Q), bringing 1H17 net income figure to EGP509.6mn (+257% Y-o-Y). The quarter saw delivery of 120 units, bringing the total to 146 units in 1H17. We forecast EGP2.5bn in revenue and EGP1.1bn in net income for 2017, with a gross profit margin at 66.6%. The company is yet to report its full statements for 2Q17.
Reiterate Buy rating: good story, attractive valuation
We have a Buy rating on Medinet Nasr Housing, on roughly 30% upside. We favour the company’s low cost, undisputed and prime-located land bank, which will continue to appreciate in value, in our view, in a backdrop of high-inflationary environment and increased scarcity of well-located land plots. Moreover, its efforts to unlock the value of its land bank by launching new projects gives us comfort with regards to the speed of value monetisation.
Mai Attia
Sara Boutros