PORTO GROUP – VALUATION UPDATE
​We revise our assigned fair value to Porto Group downwards to EGP 0.40/Share from EGP 0.47/share; but continue to recommend the stock as a Buy. Apparently we were over-optimistic with the legally new born established group – supported by the group`s budgetary guidance of being able to record EGP 1.8-2.0bn of revenues (versus our previous estimate of EGP 1.5bn) and EGP 200-220mn of net profit in 2016 (versus our previous estimate of EGP 188.9mn), as the company was expecting 3Q2016 and 4Q2016 to witness massive commercial areas` deliveries and more units in Porto New Cairo. The cut down in valuation took place mainly on shifting the turning point in profitability and operational health to 2017 instead of 2016. Worthy to mention, that a major contributor to our valuation cut continues to be the hike in cost of equity impacting all stocks in our valuation horizon. Although we trim down our estimates relative to our initiation of coverage in August 2016; we advise our readers to rapidly consider the investment from a tactical point of view. As all the real estate listed companies valued in our investment horizon have successfully reached, surpassed or strongly approached our assigned valuation (SODIC, Palm Hills, Amer Group and Madinet Nasr). Hence, with an upside potential of 16.6%, we currently see Porto Group appropriate to be strongly considered in the selection process. Although Porto Group stock price fell by a 12.8% YTD vs. the real estate whole sector surging by c. 40%. It had already surged in market value by c. 36% since the EGP flotation.
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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