Investment case

1. Palm Hills Developments Company PHDC.CA/PHDC EY | Hold Recommendation | HighRisk | LTFV EGP5.0 | Target Price EGP2.3 | Analyst: HanySamy 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. • Shareholder Structure • MansourMaghraby 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 27thJan – 23rd Mar 2011) Key Performance Indicators 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.