We maintain our ACCUMULATE rating on TMG, revising up our target price to EGP 12.48 per share on promising outlook following robust off-plan sales, high deliveries, enhanced earnings visibility and healthy liquidity led by strong cash collections and proceeds from Saudi land sales. We believe the stability in Egypt following major political developments will pave the way for better economic conditions, positively weighing on sales of residential units and hotels revenues at TMG.
TMG H1 top-line rose by 10% y-o-y to reach EGP 2.7 billion as sales from real estate units, which account for 86% of revenues, registered an 11% growth on higher delivery units. Similarly, TMG managed to record a 7% upswing in revenues from hotels to EGP 232 million despite the 25% y-o-y fall in tourists flow to 4.5 million in H1. As for earnings, they recorded a double-digit growth of 12% to reach EGP 351 million as the EGP 105 million foreign exchange gains and EGP 272 million gains from Saudi land sales offset the EGP 351 million impairment of investment from subsidiaries. Going forward, we expect 2014 earnings to remain strong at EGP 692 million on higher deliveries and revenue recognition.
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