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Naeem raises Amer TP to EGP1.70/share, reiterates Accumulate

Naeem raises Amer TP to EGP1.70/share, reiterates Accumulate
Amer Group
AMER
-2.06% 1.00 -0.02
Naeem Research issued a report on Amer Group Holding, saying the company’s 4Q13/ 2013 results were in line with its forecasts, expecting recovery in 2014.
The research firm raised its TP on Amer to EGP1.71/share from EGP0.70, maintaining its Accumulate recommendation.
“We expect Amer Group to continue performing well on off-plan sales given recent launches (Porto October and, launch of the Porto Cairo mall). Real estate business performance is likely to improve on higher deliveries coming from Porto South Beach, Porto Sharm, Porto Cairo Mall, Porto Golf Bay, Porto Marina Residence, and Golf Porto Sokhna. Amer’s upcoming ventures in Jordan and Morocco were talked about before, but it now seems that the company has made some progress towards launching these projects; we could expect more color in the future. However, Amer’s strategy in Syria, where uncertainty still looms, is not clear yet (Amer already invested EGP267m so far on Porto Tartous) and needs to be contemplated,” Naeem said.
It added that Amer’s 4Q13 net income of EGP11.2m, came in-line with its expectations. 2013 net income stood at EGP32.2m compared to EGP162.9m in 2012, down 80% YoY. Revenues declined by 24% YoY to EGP878m in 2013; mainly due to lower deliveries. Selling and marketing costs were up 18% YoY to EGP172m in 2013. Gross profit margin declined to 36.8% in 2013 (from 46.7% in 2012), while operating profit margin shrunk to 4.3% in 2013 (from 21.5% in 2012). Interest cost declined by 63% YoY to EGP11m in 2013, due to an improving balance sheet. Net cash improved 24% YoY to EGP586m in 2013. The board has recommended EGP0.03/share dividend and 0.5 bonus share for each share held. The dividend of EGP0.03/share translates to a dividend yield of 2.0%. The payout ratio of 2.9x is fairly high due to the lower earnings base (EGP93m dividend versus EGP32m net income)