Palm Hills Development Company (CA:PHDC) has capitalised on a period of strong housing demand (which the recent devaluation continues to support) during the economic recovery since the 2011 revolution to accelerate development and grow sales. The balance sheet has been significantly strengthened since and the group is actively pursuing growth of its land bank following a period of optimisation. As operating cash flow improves, the company is investing in recurring revenue streams from commercial properties. Despite these positive developments, the share price has continued to lag the sector and it now trades at one of the lowest price-to-book ratios in the peer group.
Record results in 2015 and dividend
2015 saw strong further progress on gross sales (“reservations”), up 61% y-o-y, together with accelerated construction work and deliveries. Revenues grew 69%, net profits nearly tripled and EPS increased 135% y-o-y. The balance sheet was strengthened significantly and a dividend of EGP0.15 a share was paid on 7 April 2016 in the belief (consistent with our estimates) that operational cash flows are set to be on an improving trend. Management is optimistic about the current year, a view reinforced by strong demand for two recently launched projects.
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