SODIC announced record results yesterday with net profit after tax and minority interest coming in at EGP 429 mn for 2016, up 38% y-o-y. Revenues for the year also grew by 40% y-o-y to record EGP 2.07 bn. “The main contributors to revenue growth during 4Q16 and the 12 months ended December 2016 were Eastown Residences and Westown Residences. Deliveries in Eastown Residences commenced in May of 2016 while in Westown Residences 80% of projects units were delivered by the end of the same year,” the company said in a filing. SODIC says 2016 saw cancellations dip to 4%, a record low, and deliveries and collections increase by 46% and 31% y-o-y, respectively. The EGP float impacted the company’s cash balances positively, causing a revaluation of EGP 68.5 mn in 2016. For 2017, SODIC expects contracted sales to reach EGP 5.6 bn and is looking to deliver 1,150 units across its projects. The company also plans to invest EGP 3 bn during the year.

We also attended SODIC’s roundtable with Managing Director Magued Sherif yesterday. The key points from the discussion were:

• Sherif said expectations of devaluation “helped in accelerating buying decisions,” as Egyptians invest in real estate as a hedge against devaluation, which was reflected in SODIC’s earnings in 2016.

• “We will not decrease our prices,” Sherif said, explaining that he does not think prices should keep changing with exchange rate fluctuations, especially as contractors continue to jack up prices on the other end.
• The company is on the lookout for additions to its land bank, Sherif said, adding that SODIC is open to partnerships with the state and private entities. The challenge for SODIC is that no large areas of land have been tendered last year and that it only considers land plots that are dispute-free.
• Sherif also tempered expectations about SODIC participating in affordable housing projects. Low income housing will demand that the state make a conscious decision to make land available to developers at lower prices, he said.
• SODIC is looking into projects in the new administrative capital, but has not reached a decision yet on whether to invest there or not. “What is lacking is communication with the community of developers so that we have a complete picture about the city … the timeline for execution is out of step with the magnitude of the project,” Sherif said.