reports
- Omar El Menawy
Turn Neutral following stock correction
Tourism investment remains under pressure. We still believe that the operating environment for ERC remains challenging due to: i) a volatile FX rate and high interest rates discouraging land acquisitions, ii) the ongoing Russian travel ban, and iii) subdued investment sentiment as tourism recovery takes longer-thanexpected (1Q17 arrivals +51% y-o-y, but still 58% below 4Q10 levels), with demand in tertiary residential market still lacking foreign support, despite the EGPdevaluation, in our view....
- Omar El Menawy
Current FX rate unfavourable for collections, new sales; downgrade to ...
Weakened EGP a double-edged sword. We factor in EGP devaluation to translate USD-denominated receivables (66% of assets, 32% of TP) and USD-priced residual land (c2mn sqm ex-phase 3). This has us hiking our TP by 18% to EGP1.10/share, warranting an Underweight rating given the recent share rally (previously Neutral). However, we argue that the magnitude of recent EGP weakness is not in favour of receivables collections with clients unlikely to settle at current FX rates, without a sustainable re...
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