AMER GROUP – INITIATION OF COVERAGE
​We initiate coverage on Amer with a fair value of EGP 0.266/share, we valued Amer Group using SoTP valuation, utilizing an average WACC of 21.5%; a perpetual growth rate ranging within 2-3%, resulting in a downside potential of 5.1% from the current trading level. Hence, we recommend investors to start reducing position gradually. Amer Group, post split business model is supposed to be a pure recurring income dependent; however, we believe the recurring income segments being mainly located in touristic destinations does not secure the group`s future. The group also has plans to become a land owner, and replicate the co-development agreement model followed with Porto Group. We do not account for such scenario over the horizon due to the lack of visibility. And we do not actually believe such business plan to be value additive in the future, due to the current scarcity of land areas in Satellite cities and touristic destinations. In addition to the rapid inflationary nature in land prices currently observable; hence, squeezing margins already. We mean that a revenue share agreement of 14-20% as the agreements range conducted, leaves little margin insufficient to add value for the developing partners.
Amerisur Resources acquires, explores and develops large acreage positions in underexplored basins located in South America, with a focus on the Putumayo basin in Colombia. Co. has two business segments, Colombia and Paraguay, which are both involved in exploration and production. As of Dec 31 2016, Co.'s proven and probable gross field reserves were 24.5 million barrels of oil.
Since its founding in 1992 as a privatization consulting office to the government of Egypt, Prime has successfully reinvented itself as a regional investment bank with a presence in major Arab markets. We provide innovative and outstanding financial services to corporations, institutions, governments, and individuals, using the breadth of our expertise to enable them to reach their objectives.
Over the years, we have refocused our business and our people while extending our geographical reach and strengthening our technological capabilities.
Today, Prime is:
- A competitive leader in the region
- Focused on both clients and products
- Led by pioneers who see change as an opportunity that constructively challenges the status quo
- Driven by a fearless and unconditional commitment to delivery and performance
- Supported by a culture that emphasizes teamwork and a sense of urgency
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