We raise our target price on SODIC to EGP 53.45 per share, maintaining our ACCUMULATE rating as land replenishment may lead the way to stronger growth potential. We believe the resolution of all legal disputes on top of the replenishment of SODIC’s land bank and the company’s strong effort to launch new projects will definitely boost fundamentals in the future. Moreover, we see the recently approved capital increase as an additional positive announcement as it is expected to strengthen SODIC’s balance sheet and raise liquidity for new land acquisition.
SODIC recorded an exceptional set of H1 results with revenues jumping by 39% y-o-y to reach EGP 635 million following higher than targeted deliveries of 223 units worth EGP 644 million compared to 212 units worth EGP 423 million a year earlier. Likewise, SODIC’s H1 bottom-line surged in line with the robust growth in revenues, reaching EGP 91 million compared to EGP 49 million recorded a year earlier with a net margin of 14.3% as opposed to 10.8% in H1 2013. Looking forward, we expect SODIC to register a profit of EGP 211 million in 2014 on the back of strong sales and a replenished land bank
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SODIC – H1 2014 Update