Revenue – EGP2.0bn, +89.7 Y-o-Y, +34.8% Q-o-Q, +131% vs. EFGe EBIT – EGP310.1mn, +427% Y-o-Y, -14.6% Q-o-Q   Net profit – EGP236mn, +39.6% Y-o-Y, +0.2% Q-o-Q, +41.0% vs. EFGe Net contracted sales – EGP2.4bn, +53.0% Y-o-Y, +28.9% Q-o-Q, +32.8% vs. EFGe   Palm Hills Developments (PHD) reported its financial results for 4Q16. Net contracted sales were strong, coming in at EGP2.4bn (+53% Y-o-Y, +29% Q-o-Q), bringing 2016 total to EGP7.1bn (+22% Y-o-Y), helped by sales at the company’s most recent launch, Palm Hills New Cairo. Gross sales came in at EGP2.7bn in 4Q16 and EGP8.2bn in 2016. Reported numbers were robust, on increased execution/deliveries and increased prices. Following the acquisition of 190 feddans in West Cairo from the Egyptian government, management has indicated that it is in negotiations to acquire additional land plots in Alexandria and the 6,000 feddan land in West Cairo with NUCA. The company is planning to spend EGP2.3bn in construction in 2017 (up from EGP2.0bn in 2016) and to hand over 1,600 units during the year (down from 2,049 units in 2016, as more projects reach conclusion during the year, including Palm Hills Katameya, Palm Hills Katameya Extension, Village Gate, Casa and Hacienda White 2).   Main positives   Contracted sales beats expectation, totalling EGP2.4bn in 4Q16 (+53.0% Y-o-Y, +28.9% Q-o-Q, +32.8% vs. EFGe) and EGP7.1bn in 2016 (+22.3% Y-o-Y). Management indicated that the numbers were fuelled by the launch of Palm Hills New Cairo during November 2016, recording EGP1.1bn in gross sales. The beat compared to our numbers is due to the sales in Palm Hills New Cairo included in the new contracted sales numbers vs. our model that assumes reservations to be converted to contracted sales in 2017    Selling prices rose 56% Y-o-Y in 2016 for BUA of standalone units, 43% Y-o-Y for BUA of apartments and 28% Y-o-Y for land Strong reported revenue, coming in at EGP2.0bn (+89.7% Y-o-Y, +34.8% Q-o-Q, +131% vs. EFGe). 2016 revenue was EGP5.6bn, up 54.6% Y-o-Y. Growth was driven by increased pace of delivery across the company’s projects. 597 units were delivered in 4Q16 (+10.6% Y-o-Y, -4.9% Q-o-Q from a record quarter), bringing the total to 2,049 units (+30.5% Y-o-Y), above management target for the year of 1,800 units Improved gross profit margin Y-o-Y to 28.6% (+6pps Y-o-Y, -6pps Q-o-Q), attributed to higher contribution of villa deliveries during the quarter compared to 4Q15. However, margins for the year contracted by 180bps Earnings beat estimate by 41%, on the back of higher revenue.  Net income was EGP235.5mn in 4Q16 (+39.6% Y-o-Y, +0.2% Q-o-Q). 2016 net income was EGP639.8mn (-30.1% Y-o-Y, adjusted to capital gains on investment properties: +30.6% Y-o-Y) Stable leverage despite higher net debt, with total total-debt-to-equity hitting 0.55x in December (September 2016: 0.57x, December 2015: 0.48x), while net-debt-to-equity was unchanged sequentially at 0.42x (0.48x in December 2015). Leverage is expected to drop going forward, with the closure of the first tranche of the company’s securitisation plan worth EGP404mn in January (Company disclosure, Mai Attia, Sara Boutros)   Palm Hills: EGP2.96 as of 7 Feb. 2017, Rating: Buy, TP: EGP3.06/share, MCap: USD374mn, PHDC EY/PHDC.CA