CAIRO: Egyptian real estate developer Talaat Mustafa Group (TMG) recently posted LE 1.32 billion ($237.4 million) net income in 2007, displaying 70.9 percent in net profit margin.
“The [firm’s] capital and revaluations gains reached LE 561.1 million and LE 512.1 million, respectively, (a combined value of LE 1.1 billion) in fiscal year 2007, boosting the company’s bottom line, HC Securities said.
The group has not yet released its fully detailed financial annual report, but HC Securities puts the group’s consolidated revenues at LE 1.86 billion and gross profit at LE 850.2 million, which means that gross profit was 45.5 percent up in 2007.
“The company’s top line does not reflect its performance in [fiscal year] FY07 in terms of units sold, as revenues are recognized in the income statement upon units delivered. However, during 2007, the company managed to increase the number of units sold by 42 percent year-on-year to reach 10,520 units, the brokerage stated.
The group is made up of 21 companies operating in real estate and tourism, making it Egypt s biggest real estate developer. TMG develops large-scale city and community complexes, mainly located on the outskirts of Cairo. It also develops hotel complexes, which include residential apartments and/or villas and, in most cases, office spaces and shopping areas.
The company’s largest development to date is Madinaty, which comprises a land area of 33.6 million square meters in New Cairo City with a proposed residential capacity of 600,000 people. Sales commenced at Madinaty in 2006, and the project is expected to complete in 2023.
TMG is also the sole developer of residential projects Al-Rehab (in New Cairo City), Al-Rabwa (in Sheikh Zayed City), and May Fair (in Al-Shorouk City). HC Securities predicts that revenues from units sold contributed 86.3 percent to total revenues, recording LE 1.6 billion last year.
The company is also active in development of hotels and resorts. Under the Four Seasons brand, it currently operates three hotels: Four Seasons Sharm El-Sheikh, Four Seasons Nile Plaza, and San Stefano Grand Plaza. TMG has two other hotels underway: the Nile Hotel expected to open early next year and the Marsa Alam Hotel.
According to HC Securities, hotels and services revenues contributed 13.7 percent to total revenues to end at LE 255.0 million in 2007, while the group’s entire projects have scored a 78.7 percent year-on-year growth in revenues.
TMG made headlines last November when it raised more than $750 million in a private placement and an initial public offering to be used to finance future projects in Egypt and the Middle East.
The IPO of 65 million shares worth LE 715 million ($129.3 million) – the biggest in Egypt’s stock exchange history – was covered a whopping 41.4 times. An earlier private placement of 330 million shares was 17 times oversubscribed, making it the biggest of its kind in Egypt. Shares in the company ended their first trading day at LE 13.55, 23 percent above their IPO price.
The company represents the macroeconomic story in Egypt, which is the rise of the middle class. There are not many real estate companies listed [on the bourse], and there is a lot of interest in the real estate market, Mohamed Ebbed, head of western institutional sales at EFG-Hermes, previously told Daily News Egypt.
Furthermore, TMG recently revealed intentions to issue bonds worth LE 500 million ($90.25 million) in next June through an affiliate company. It added it could issue more bonds in coming years with a value between LE 2-LE 3 billion. The firm said in December it had bought more shares in four affiliate hotel companies for $350 million as part of an expansion plan in the sector. HC Securities said future expansion plans could include a new Four Seasons Hotel in Madinaty as well as execution of real estate projects in Saudi Arabia.
