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OKAZ sets El Kahera Housing FV at EGP9.65/share

OKAZ sets El Kahera Housing FV at EGP9.65/share
El Kahera Housing
ELKA
-2.65% 1.51 -0.04

OKAZ Stock Brokers & Investments issued a report on Egypt’s El Kahera Housing, setting the stock’s fair value at EGP 9.65/share with a total return of 2% as a result of the 4% expected dividend yield that compensates for the 2% downside risk.
“As per our rating guidelines we issue a Hold recommendation,” said the brokerage firm.
El Kahera Housing & Development is a market leader in the middle and upper middle housing segment, delivering units of higher quality in terms of design and finishing thus differentiating itself from competition and charging higher prices.
The company utilizes its land portfolio in a diversified manner through adding shopping centers & malls to its residential projects. It focuses on small scale real estate developments which gears up operational turnovers and smoothes out the liquidity cycle. The company enjoys a land bank that was bought a long time ago at very low prices. It divides its projects into phases that are sold separately in order to maintain comfortable liquidity levels and streamline revenues, according to OKAZ.
El Kahera Housing consolidated net profit rose 97% to reach EGP 44.8mn in 1H2014 compared to EGP 22.7mn in 1H2013.
The company’s consolidated revenues inched up 1% to record EGP 224.9mn in 1H2014 compared to EGP 223.1mn in 1H2013 as a result of a 42% increase in contracting activity revenues, a 3-fold rise in installment interest revenues and a more than 10-fold increase in other operating revenues, all of which compensated for a 25% decline in housing and development project sales.
OKAZ expected the company to post EGP 124.8 million net profit for FY14, with a drop by 16% compared with EGP 148.6 million a year earlier. Net earnings were forecasted to amount to EGP 134.6 million in FY15 and EGP 199.8 million in FY16.
Revenues were forecasted to reach more than EGP 307 million in FY14, with a decline by 28% compared with EGP 428 million in FY13. They were expected to reach EGP 351.9 million and EGP 606.7 million in FY15 and FY16 respectively.