Investment banks: The results of “Talaat Mostafa” exceed our expectations for the current year

Local investment banks have outlined a positive scenario for this year’s business results of Talaat Moustafa Group, expecting the company’s financial indicators to exceed their expectations, supported by the performance achieved in the first nine months of the year.

In the mentioned period, the group achieved a 23 percent increase in income, with an increase in real estate income of 17 percent and hotel income of 80 percent, which is also higher than the expectations of investment banks.

In support of these strong results came recommendations for the company’s shares between increasing the relative share of the investment portfolio and buying.

In a statement on its business results published on the screen of the Egyptian Stock Exchange, the group said that it managed to achieve this effect despite the global political and economic crisis, led by the Russian-Ukrainian war and the continuation of the Corona pandemic, and their continued health, social and economic effects on all sectors, and especially on the tourism and real estate sector.

Mubasher: Hotels and real estate contribute 87% of revenue in 9 months

Mubasher Research attributes the increase in net profit during the first nine months of this year mainly to a 16.3% increase in gross profit, to a record £3.342 billion during the period, compared to £3.733 billion during the same period in 2021, reflecting a gross profit margin of 31 .2% during the period. The first nine months of 2022, which is a decrease compared to 33% in the same period last year.

She said the increase in gross profit was due to a 23% increase in revenue, to reach £13.915 billion during the first nine months of this year, compared to £11.313 billion in the same period last year.

The company’s positive performance during the first nine months of this year is the result of an 80% increase in total revenues of the Four Seasons, Sharm El Sheikh Hotel, San Sifano Hotel and Kempinski Hotel, along with a 17% increase in total property revenues, as both contributed 87 .4% of the company’s total revenues.

Mubasher touched on the company’s Q3 quarterly results, as the company reported a 7% increase in net profit attributable to shareholders to 887.4 million pounds compared to 829.4 million Egyptian pounds in the same period in 2021, reflecting net profit margin of 6.3% during the period. The third quarter of 2022, compared to a rate of 7.5% during the same period in 2021.

Mubasher attributed the increase in the company’s net profit during the third quarter period mainly to a 6.7% increase in gross profit, recording 2.010 billion Egyptian pounds, compared to 1.884 billion Egyptian pounds in the same period in 2021, reflecting a gross profit margin of 14.4% during the third quarter of 2022, down from 16.7% during the same period in 2021.

The increase in gross profit was due to a 17.2% increase in revenue, recording EGP 6.822 billion in the third quarter of 2022, compared to EGP 5.821 billion in the same period in 2021.

Mubasher said Talaat Mostafa saw a 10.1% rise in backlogs to £70bn during the first nine months of this year, compared to £63.6bn in the same period last year, while property sales witnessed a 23 .6%, recording £21 billion during this period. , compared to £27.5bn in the first nine months of last year, supported by the record high levels of the £17.8bn Noor project, indicating a clear picture of future cash flows and future earnings.

“Al-Ahly – Pharos”: We are likely to exceed our estimates for 2022 sales.

Research unit Al-Ahly-Pharos described sales growth in the third quarter as “impressive”, as sales totaled £9.7bn, up 49.2% year-on-year.

Revenues rose in the third quarter of the year by 17.2% year-on-year and 67.7% quarter-on-quarter to reach £6.8 billion, taking nine-month revenues up 23% to £13.9 billion.

This growth was supported by a 17.6% year-on-year increase in real estate revenues to EGP 10.7 billion, an 81.8% year-on-year increase in hotel revenues to EGP 1.5 billion and a 28.6% year-on-year increase in services revenues to EGP 1.8 billion.

Gross profit rose in the third quarter by 61.5% year-on-year to two billion pounds, leading to a gross profit margin of 29.5%, down year-on-year and quarter-on-quarter.

Net profit rose in the third quarter by 7% year-on-year to 887.4 million Egyptian pounds, leading to a net profit margin of 13%, down year-on-year and quarter-on-quarter. Net profit during the first 9 months of this year recorded two billion pounds, which is an increase of 17.7%.

He maintained his recommendation to increase the relative share of stocks in the investment portfolio. She said the group, which posted sales of 21 billion pounds in the first nine months of the year, is on track to beat our full-year sales expectations of 24.4 billion Egyptian pounds, compared to our estimate of 16.66 pounds. per share.

She pointed out that the hotel’s 9-month revenues of 1.5 billion Egyptian pounds are already higher than their expectations for the current year, which were 1.2 billion Egyptian pounds, with a likely increase in the last quarter with the support of the climate summit. which was held in Sharm El-Sheikh this November. He maintained his overweight recommendation given the strong sales performance and strong recurring revenue.

“Naeem”: the incentive package supports the company’s position

Youssef Al-Banna, a financial analyst at Naeem Investment Bank, said the group’s net profit after tax and minority rights in the third quarter of this year was 887 million Egyptian pounds, up 7.1% year-on-year, beating their expectations 634 million pounds, supported by a strong performance from the real estate sector.

At the same time, Al-Banna noted that gross profit margin stabilized at 29.5%, down 2.9 basis points year-on-year (below our estimate of 33%).

Third quarter revenues were EGP 6.8 billion, up 17.2% YoY, driven by strong project delivery rates that exceeded our expectations of EGP 4.4 billion.

He said total sales were £9.7bn in the third quarter of the year, up 49.2% year-on-year, beating our estimate of £8.7bn. Having benefited greatly from the EGP 11.5bn sale of Rawasa and First Design in the first half of the year (which the company announced is yet to be recognized in sales), complemented by residential sales in Nour City, Celia and Madinaty.

He continued, due to strong sales, backlog reached EGP 70 billion, an increase of 4.5% quarter-on-quarter and 10.6% year-on-year, with the amount expected to be recognized as revenue over the next five years.

He said key performance indicators for hotels fell on a quarterly basis, despite the summer season: due to lower occupancy rates and average room rates.

The average group room rate was EGP 5,869 per night, down 12% compared to the previous quarter, mainly due to a lower return rate at Four Seasons Nile Plaza, Sharm El Sheikh.

Occupancy decreased slightly, averaging 55% in the third quarter of the year, compared to 56% in the second quarter of the year due to lower inflows from the Four Seasons Sharm El Sheikh and the Kempinski.

Gross margin for hotels also declined, with gross operating profit down in all units except Four Seasons San Stefano. We expect hotel prices to rise in the fourth quarter thanks to the holiday season.

Al-Banna believes that the company is expected to benefit from the recent depreciation of the local currency, given that the hotel sector’s revenues are denominated in foreign currency, and is expected to post a net profit of EGP 2.6 billion this year year.

Al-Banna maintained a buy recommendation on the stock with a target price of EGP 10.56, noting that the company’s strong commercial name and vast land portfolio provide a 16-20 year sales vision.

Al-Banna outlined an incentive package for the company, which included the launch of Noor City, which represents an incentive for higher sales, revenue and new profitability for the company in the future, and having the company’s highest contract sales. maturities among its peers in the sector, which provides a strong vision for revenue and cash flow growth, and a fully owned land portfolio. For the company in Madinaty and Al-Rehab (whose value is paid in full and does not bear any other financial obligation); This provides the company with greater liquidity and intense competition in East Cairo and the New Administrative Capital, where all of the company’s residential projects are located.

On the other hand, he believes challenges include the huge construction costs required to develop the recently launched Noor City project, estimated at more than 21 million square meters and costing 500 billion Egyptian pounds, which will put pressure on already heavily indebted balance sheets.