TMG Holding (TMG) reported its headline figures for 4Q16. Contracted sales were strong, coming in at EGP1.88bn [(+73.8% Y-o-Y, +8.2% Q-o-Q, +34.0% vs. EFGe), bringing 2016 total contracted sales to EGP7.4bn (+18.2% Y-o-Y)]. Management indicated that contracted sales completed during the quarter continue to come predominantly from Madinaty, with challenges to secure building permits at Rehab continuing to persist. Revenue from hospitality continued to be weighed down by low occupancy rates in Sharm El Sheikh, while hotels in Cairo and Alexandria maintained their relatively improved performance.

Reported revenue in 4Q16 came in at EGP2.6bn (+3.6% Y-o-Y, +159.9% Q-o-Q, EFGe: -0.6% vs. EFGe). Gross profit was EGP1.1bn (+6.4% Y-o-Y, +200% Q-o-Q, +18.9% vs. EFGe), translating into a Gross Profit Margin (GPM) of 41.7% (4Q15: 40.6%, 3Q16: 36.1%). Net income was EGP211mn (-8.4% Y-o-Y, -16.0% Q-o-Q, +22.4% vs. EFGe). 2016 revenue was EGP6.6bn (+6.0% Y-o-Y), gross profit EGP2.4bn (+12.3% Y-o-Y) and net income EGP827mn (+8.5% Y-o-Y). The numbers indicate no (or limited) FX losses reported on the P&L; we await the release of the full statements for more insight on this.

TMG Holding: EGP7.75 as of 1 Mar. 2017, Rating: Buy, TP: EGP12.4/share, MCap: USD992mn, TMGH EY/TMGH.CA