Palm Hills Developments, an Egyptian property firm, is known for its luxury projects, but a shift toward a broader demographic could pay off for its sluggish stock. Palm Hills shares have underperformed the Egyptian EGX 30 Indexon concerns over land disputes in Egypt as well as fears that the country is in the midst of a slowdown in sales of high-end residential and holiday homes. The EGX 30 is down 2.8 per cent this year. Palm Hills closed yesterday at 4.42 Egyptian pounds, leaving it down 21 per cent this year.
But Ahmed Badr, a Credit Suisse analyst, carries an "outperform" rating on the stock with a target increase of 37 per cent. The stock trades at a price-to-book-value of 1.06 times, a discount of 12 per cent to its main competitor, Six of October Development and Investment, he said. Mr Badr forecasts Palm Hills will post a net income of 547.7 million pounds for the second quarter. The company reported a net income of 475.6m pounds for the same period last year. In the first quarter of this year, its sales surged by 86 per cent from the year earlier.
The developer boasts a healthy backlog, particularly in the middle-income segment that should see higher growth this year. As high-end sales slow "we think the shift towards targeting the middle-income housing segment is key for future sales and is underestimated by the market", Mr Badr said. Palm Hills still has some of the widest margins among developers as it enjoys low land costs and has its own construction capabilities.
The company, with a market cap of 4.7 billion pounds, was launched in 2005 and is listed on the Egyptian Stock Exchange with a free float of 35 per cent. One of its more ambitious projects in the pipeline is Palm Hills Sokhna, a resort covering more than 5 million square metres on the Red Sea coast. Palm Hills is also a partner with Burooj Properties, an arm of Abu Dhbai Islamic Bank, on a project in Cairo.
halsayegh@thenational.ae
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Sustainable Development Goals
1. End poverty in all its forms everywhere
2. End hunger, achieve food security and improved nutrition and promote sustainable agriculture
3. Ensure healthy lives and promote well-being for all at all ages
4. Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all
5. Achieve gender equality and empower all women and girls
6. Ensure availability and sustainable management of water and sanitation for all
7. Ensure access to affordable, reliable, sustainable and modern energy for all
8. Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all
9. Build resilient infrastructure, promote inclusive and sustainable industrialisation and foster innovation
10. Reduce inequality within and among countries
11. Make cities and human settlements inclusive, safe, resilient and sustainable
12. Ensure sustainable consumption and production patterns
13. Take urgent action to combat climate change and its effects
14. Conserve and sustainably use the oceans, seas and marine resources for sustainable development
15. Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss
16. Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels
17. Strengthen the means of implementation and revitalise the global partnership for sustainable development
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The Cairo Statement
1: Commit to countering all types of terrorism and extremism in all their manifestations
2: Denounce violence and the rhetoric of hatred
3: Adhere to the full compliance with the Riyadh accord of 2014 and the subsequent meeting and executive procedures approved in 2014 by the GCC
4: Comply with all recommendations of the Summit between the US and Muslim countries held in May 2017 in Saudi Arabia.
5: Refrain from interfering in the internal affairs of countries and of supporting rogue entities.
6: Carry out the responsibility of all the countries with the international community to counter all manifestations of extremism and terrorism that threaten international peace and security
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Power: 150hp
Torque: 250Nm
Price: From Dh139,000
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How to protect yourself when air quality drops
Install an air filter in your home.
Close your windows and turn on the AC.
Shower or bath after being outside.
Wear a face mask.
Stay indoors when conditions are particularly poor.
If driving, turn your engine off when stationary.
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