Investment case • Palm Hills Developments is an elite developer with a land bank amounting to 47.8mn sqm. • It targets the upper and upper-middle income groups. • The company has a diversified revenue line driven from the real-estate activity and the tourism activity. • PHDC signed an agreement with Burooj Capital to sell and market its units in the Arab Gulf region. • Earlier, PHDC signed a partnership with Allams’ Sons (a reputable local contractor) to fully integrate its business model Downside Risks • A local political and economic situation that has a negative impact on the demand for new real estate units. • Furthermore, the company may witness an increasing number of cancellations • A regional and local political issue that has a negative impact on the tourism industry • A corruption case against PHD’s Chairman and CEO related to wasting public funds • About 3% of the company’s land bank is facing legal issues. Palm Hills Developments Company Company Profile The Palm Hills Developments Company [PHDC] was incorporated in 2005 as a joint stock company, operating under the provisions of the Investment Guarantees and Incentives Law No. 8/1997, Company Law No. 159/1981 and Capital Market Law No. 95/1992. PHDC's core activities include the construction of integrated projects, management of residential compounds and resorts after construction is completed, investment in real estate and the sale/lease of properties. PHDC owns 11 subsidiaries and has also entered into strategic partnerships to pursue development projects on its well-diversified land bank: 47.8mn sqm spread all over Egypt. Shareholder Structure • Mansour Maghraby Investment & Development 54.2% • Free Float 33.7% • Top Management 12.0% • Banks, Insurance Companies & Others 0.2% 52-Week Performance & Share Daata (*EGX suspended 27 th Jan – 23 rd Mar 2011) PHDC.CA/PHDC EY | Hold Recommendation | High Risk | LTFV EGP5.0 | Target Price EGP2.3 | Analyst: Hany Samy Key Performance Indicators EG P m n/FY E D ecem ber 2007a 2008a 2009a 2010a 2011e 2012e R evenue 535.0 1,234.8 1,145.8 1,831.0 3,214.5 4,150.5 G rowth R ate (% ) n/m 130.8 -7.2 59.8 75.6 29.1 EB ITD A 282.8 743.6 530.1 649.5 1,299.4 1,692.4 G rowth R ate (% ) n/m 162.9 -28.7 22.5 100.1 30.2 EB ITD A m argin (% ) 52.9 60.2 46.3 35.5 40.4 40.8 NetIncom e 188.9 657.7 475.6 526.4 951.0 1,346.1 G rowth R ate (% ) n/m 248.3 -27.7 10.7 80.7 41.5 N etm argin (% ) 35.3% 53.3% 41.5% 28.7% 29.6% 32.4% PER 12.7x 3.6x 5.0x 4.5x 2.5x 1.8x P /BV 2.3x 0.9x 0.8x 0.5x 0.4x 0.4x EV/EB ITD A 9.5x 4.0x 6.4x 5.1x 2.3x 1.8x N etdebt/EB ITDA 1.0x 0.8x 1.9x 1.4x 0.5x 0.4x D ividend Yield N/A N/A N/A N/A N/A N/A S o urc e: C IC R D atabas e Sector: H ousing & Touristic R eal Esta ISIN : EG S655L1C 012 LastP rice (EG P) 2.28 52 W eek H igh 6.42 52 W eek Low 1.44 100-dayA v. Volum e 3,082 (000' shares perday) N o. ofShares (m n) 1,048.3 M arketC ap (EG Pmn 2,390 *P rices as atclose on 30th M ay2011 - 10,000 20,000 30,000 40,000 50,000 60,000 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 Jun-10 Aug-10 Oct-10 Dec-10 Mar-11 May-11 Shrs('000) EG P Volume PHDC EG X 30rebased