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Wednesday, 17 November 2021

Earnings Watch: SODIC, IDH, Palm Hills, MM Group, Vodafone Egypt

Upmarket real estate developer SODIC saw a 75% drop in net income during 3Q2021 as revenues declined due to timing differences in deliveries compared to the same period last year, according to its quarterly earnings release (pdf). The company reported a bottom line of EGP 120 mn for the July-September quarter after revenues fell almost 40% to EGP 1.44 bn due to a 40% decline in delivered units.

SODIC looks on track to make up the gap in the final quarter of the year: The company noted that “the majority of 2021 unit handovers [are] scheduled for the fourth quarter of the year.” Revenues are down just 8% on a 9M basis while net income is off 37% in the same period.

Remember: For real estate companies, “sales” ≠ “revenues.” They book a sale when you sign a contract to buy a home. But they only record (some or all) of the value of the unit it sold you when it (a) delivers the unit to you or (b) hits a percentage completion on a total project.

On the sales front: SODIC sold 196 units during the quarter, recording gross contracted sales of EGP 1.63 bn. This compares to the 393 units sold in the same period last year when it reported EGP 2.21 bn in gross sales. New contracts were lower in large part due to the suspension of sales in its 500-acre West Cairo project, which was put on hold in August after the Housing Ministry made adjustments to the land plot. SODIC is looking to resume sales next year once the new adjusted master-plan of the project is approved, Managing Director Magued Sherif said.

Looking ahead: SODIC is on track to surpass forecasted sales for this year, due in part to the strong performance of the North Coast project June, which it launched last month. “The unprecedented success of June has put us in a good position to close another successful year with solid growth,” Sherif said.

Integrated Diagnostics Holdings’ (IDH) 3Q2021 net income jumped 138% y-o-y to EGP 479.7 mn, after revenues more than doubled to EGP 1.47 bn, according to its earnings release (pdf). The company’s top-line growth was underpinned by a surge in covid-19-related tests and conventional tests, along with house call services in Egypt and Jordan, the EGX and LSE-listed company said.

Egypt is still the company’s largest market, with revenues doubling y-o-y to EGP 1.19 bn. Covid-19-related revenues accounted for EGP 614 mn of that figure, mainly driven by growing demand for PCR tests from international travelers.

The company plans to launch two new branches of Al Borg Scan over the next six months after setting up three branches in 3Q2021, putting it on track to hit its target of rolling out a total of 30-35 new branches throughout all of 2021. IDH also expects to deliver its highest revenues on record in FY2021, anticipating 80% y-o-y growth to EGP 4.9 bn on the back of the “strong and sustained recovery” of its conventional business, as well as solid performance from its covid-19 test offerings in Egypt and Jordan.

“Looking ahead, our strategic priorities remain unchanged as we continue assisting local authorities in their battle against covid-19 while simultaneously pressing forward with our post-pandemic strategy,” said CEO Hend El Sherbini.

Palm Hills Developments’ net income fell 27% y-o-y to EGP 174.1 mn in 3Q2021, according to the company’s earnings release (pdf). This came despite a 22% increase in revenues, which jumped to EGP 1.88 bn in 3Q2021 on rising sales across all of its offerings.

On a nine-month basis, new sales reached EGP 12.9 bn, surpassing the sales level achieved in 2020 and nearing their FY2021 sales target of EGP 15 bn. By our math, the real estate company sold 1,054 units in 3Q2021. The growth was mostly carried by a 755% y-o-y rise in unit sales in Badya.

Looking ahead: The company recently inked a EGP 2.5 bn syndicated loan agreement with Banque Misr and NBE to help finance investment costs for Palm Hills New Cairo. The company is also “on track” to conclude several “on and off-balance sheet” financing agreements, including the securitization of around EGP 1.1 bn of gross receivables, in the short term, said Executive Chairman Yasseen Mansour.

Automotive and consumer electronics retailer MM Group’s net income dipped 1.5% y-o-y in 3Q2021 to EGP 87 mn, according to the company’s earning release (pdf). Revenues inched up nealy 2% y-o-y to EGP 2.2 bn during the quarter. For the first nine months of the year, net income rose 11% y-o-y to EGP 328 mn while revenues were up 8% to EGP 7.1 bn.

Vodafone Egypt’s adjusted EBITDA rose by a quarter to EUR 381 mn during the first half of its fiscal year, which ended in September, according to Vodafone Group’s earnings release (pdf). Revenues saw a 13% annual increase to EUR 861 mn. Vodafone’s fiscal year runs April to March.

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