Palm Hills Developments (PHD) reported its financial results for 2Q16. Net contracted sales were EGP877mn in 2Q16 (-26% Y-o-Y, -55% Q-o-Q) and EGP2.8bn in 1H16 (+18.3% Y-o-Y). Gross contracted sales were flat Y-o-Y at EGP1.2bn in 2Q16 and up 32% Y-o-Y in 1H16 to EGP3.4bn. Revenue was EGP1.1bn in 2Q16 (+46.2% Y-o-Y, unchanged Q-o-Q, +19% EFGe) and EGP2.1bn in 1H16 (+46% Y-o-Y). Gross profit was EGP281mn (-2.8% Y-o-Y, -8.8% Q-o-Q), translating into a Gross Profit Margin (GPM) of 26.2% (-13pps Y-o-Y, -2.5pps Q-o-Q), pressured by unfavourable delivery mix and the delivery (with delays) of units sold at distressed prices post the 2011 uprising. 1H16 gross profit was EGP589mn (-3.3% Y-o-Y), translating into a GPM of 27% (-14pps Y-o-Y). Net income was EGP63.9mn in 2Q16 (-84.5% Y-o-Y, -23.8% Y-o-Y if 2Q15 is adjusted for one-off gain, -39.4% Q-o-Q, -33% vs. EFGe) and EGP169.3mn in 1H16 (-71.7% Y-o-Y, adjusted: -37% Y-o-Y). (Company disclosure, Mai Attia, Sara Boutros)   Palm Hills: EGP2.69 as of 08 August 2016, Rating: Buy, FV: EGP3.06 per share, MCap: USD699mn, PHDC EY / PHDC.CA