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New business ventures and regional expansions, including Abu Dhabi, to add value to the company and serve as catalysts
We forecast EGP423bn in collections over 2Q25–2032e as we expect PHDC to capitalize on its EGP679bn sales inventory

HC Brokerage issued their update about Egypt’s real estate sector through shedding the light on Palm Hills Development performance focusing on the company’s strategic decisions.

Mariam Elsaadany, real estate analyst at HC Brokerage commented that: “Strategic business decisions justify a more positive view: PHDC’s expansions extended beyond the Egyptian real estate market with a new focus on the GCC, including the newly announced Abu Dhabi project, along with potential expansions in Saudi Arabia’s real estate, commercial, and educational sectors and Egypt’s educational and hospitality sectors. These new opportunities offer value and act as stock price catalysts, in our view, as the company joins other Egyptian real estate developers in capturing a share of a lucrative GCC market. Additionally, PHDC’s Egyptian real estate business grew significantly with its launch of Hacienda Heneish and Hacienda Waters on the North Coast in 2024, and a management agreement for Jirian on the Nile Delta extension in 2025. Of the company’s EGP151bn of FY24 sales, c63% were generated from the North Coast (EGP95.1bn), with some EGP82.4bn of inventory remaining in the two projects, on our numbers. The success builds on increased demand for the North Coast following the Ras El Hekma investment deal announced in February 2024 and strengthens PHDC’s position as a major North Coast developer. PHDC expanded its hospitality exposure in 2024 to 1,262 rooms by adding around 200 rooms through an agreement with Marriott International to launch the 150-room Ritz Carlton Residences Hotel in West Cairo and increasing its stake in Maccor Hotels to c70% and targets adding 4,000 new rooms over the coming five years. Also, PHDC increased its exposure to Egypt’s education sector with the acquisition of c33% of Taaleem Management Services (TALM EY), diversifying its revenue stream and increasing its recurring income businesses. The company’s announcement to develop a 1.87m sqm plot in Abu Dhabi with Wave Seven triggers a rerating in our view, due to the project’s location, expected selling price, exposure to a USD-pegged currency, and low tax rate. The project directly faces the iconic Saadiyat Island near Yas Island and Al Reem Island and will be executed through PHD North Jubail Property Development Company, a fully owned subsidiary of Palm Hills Developments. Additionally, PHDC’s announced partnership with Saudi Dallah Al-Baraka Holding Company (DBHC) includes establishing a company with a 60%/40% ownership structure to develop several integrated mixed-use urban projects in different regions of the Kingdom is a major step. PHDC also plans to invest around USD300m in Saudi education developments in 2025 with local partners, USD300m in residential and commercial projects, and is working with a local joint venture (JV) to open 15 schools in cities including Riyadh and Jeddah, its CEO said.

“Despite lower affordability in Egypt, we still expect a decent sector performance on North Coast sales, price increases, relaxed payment terms, and regional expansion: We believe developer sales in 2025e will be driven by North Coast sales, and relaxed payment terms, while ventures into the hospitality segment, along with GCC expansions, should bode well for Egyptian real estate players. We expect developers to start reaping the benefits of Ras El Hekma as early as this year with Modon Holding’s announcement of launching the first 12,000-feddan phase of the mega-project. We see little concern of construction cost overruns during the short-medium term, provided limited currency shocks, coupled with significant price increases. A declining interest rate environment should improve real demand and open new opportunities for developers, especially those with ambitious recurring income projects that are capital-intensive. Interest savings should also boost profitability to highly leveraged developers. We expect 2025e deliveries to be somewhat impacted by higher construction costs but remain at healthy levels.” Mariam El Saadany added.

The real estate analyst concluded: “We expect strong real estate cash collections of EGP588bn over our 2Q25–38e forecast horizon: We estimate EGP588bn in collections over 2Q25–38e, including collections from existing receivables, new sales in the launched projects in the North Coast, Alexandria, and Eastern and Western Cairo, capturing sales from Badya, P/X, Hacienda Heneish, Hacienda Waters, Hacienda Blue, PHNC, Bamboo III, among other projects. We forecast total sales of EGP679bn over 2Q25–2032e, including EGP506bn from West Cairo, EGP131bn from the North Coast and Alexandria sales, and EGP41.9bn from East Cairo. We estimate EGP552bn of real-estate revenue recognition over 2Q25–2032e, accounting for the outstanding backlog of EGP68.9bn and new sales from launched projects’ phases, and all of Badya. We assume a total real estate cost recognition of EGP310bn over 2Q25–2032e, implying an average future gross profit margin of c44% for the launched projects. We expect interest rate easing to reflect positively on PHDC’s profitability throughout 2025e, as we forecast interest expense to drop to EGP2.09bn in 2025e from EGP2.31bn in 2024e. Management’s guidance is EGP160m in interest savings for every 100 bps rate cut. Given the declining cost of debt, management could seize the opportunity to increase its leverage; however, given the high sales levels we expect going forward, we expect the high collections to be sufficient to finance construction costs. Accordingly, we expect net debt-to-equity to drop to 0.55x in 2025e from 0.75x in 2024. Given the company’s expansion plans, we expect it to withhold dividends going forward. We expect revenue to grow at a 2025-28e CAGR of c7%, EBITDA at c13%, and net income at c23%.”

About HC Brokerage

HC Brokerage is an affiliate of HC Securities & Investment– a full-fledged investment bank providing investment banking, asset management, securities brokerage, research, and custody services. HC Brokerage is an Egyptian registered company and member of Egypt’s Financial Regulatory Authority (FRA), and its registered address is 34 Gezirat Al-Arab St., Mohandessin, Giza, Egypt, Dokki 12311

Egypt’s external position improved on currency liberalization and economic reforms despite external shocks
We expect CIEB to maintain decent profitability despite rate cuts

HC Brokerage just issued their report about the banking sector in Egypt through shedding the light on Crédit Agricole Egypt https://www.ca-egypt.com/en/ expecting the banking sector’s profitability to start normalizing parallel to monetary easing and CIEB’s net income to grow

Financials analyst and economist at HC, Heba Monir declared that: “Egypt’s economy is stabilizing and focusing on enabling private sector growth: The Ras El Hekma USD35bn investment deal with the UAE announced in February 2024 helped the Egyptian economy to overcome the FX crunch, reduce its external debt by USD11bn, record a balance of payment (BoP) surplus, and kick-start and upsize the stalled International Monetary Fund (IMF) ’s Extended Fund Facility (EFF) to Egypt. As a result, the banking sector’s net foreign asset (NFA) position widened to USD14.7bn as of May 2025, reversing a net foreign liability (NFL) position of USD29.0bn as of January 2024, and net international reserves (NIR) increased to USD48.7bn as of June 2025. Furthermore, banks have sufficient FX liquidity, which almost eliminated the FX parallel market, and inflation subdued, allowing the Central Bank of Egypt (CBE) to start cutting interest rates by 225 bps on 17 April 2025 and by 100 bps on 22 May 2025, with further expected rate cuts depending on how the geopolitical/tariffs risks will play out. Having said that, Egypt’s real GDP growth rate remains sub-optimal despite improving to 4.8% y-o-y in 3Q24/25 from 4.3% y-o-y in 2Q24/25, and the purchasing managers index (PMI), which measures the non-oil private sector activity growth, is still below the 50.0 neutral mark. We see the government prioritizing private sector growth, capping public investments at EGP1.0trn in FY24/25 and EGP1.16trn in FY25/26, encouraging Public Private Partnerships (PPP), resuming the partial asset sale program and increasing renewable energy investments, which coupled with the expected rate cuts, should bode well for CAPEX loans growth, in our view.”

“We expect Egypt’s banking sector’s profitability to start normalizing parallel to monetary easing: Given the global economic turbulences, we expect Egypt’s interest rate cuts to be gradual, with total cuts of around 550 bps by the end of 2025e, of which 325 bps already materialized. For treasury yields, we forecast it to lag the policy rate cuts with an estimated drop of 200 bps y-o-y in the 12-month T-bills rate to 24.23% by the end of 2025. This implies a real interest rate of 5.47% by year-end, based on our calculations (after deducting a 15% tax rate for US and UK investors, and based on our 12M inflation estimates). Following the rate cuts, public and private banks have cut interest rates on their certificates of deposit (CDs) by an average of 100–225 bps. Accordingly, we expect the sector’s NIMs to start retreating gradually to an average of 8.72% in 2025e from 9.25% in 2024 for our coverage universe. As for the sector’s balance sheet, we forecast loans to grow moderately by c20% y-o-y to EGP10.0trn in 2025e, compared to c49% y-o-y in 2024 (inflated by the EGP devaluation), driven mainly by EGP loans to finance working capital needs. Given the still-high interest rate environment (overnight lending rate of 25.0%) and the lower energy subsidies for the industrial sector, we do not expect CAPEX lending to materialize before 1Q26. We expect market deposits to increase by c21% y-o-y to EGP16.2trn, compared to c33% y-o-y in 2024, mainly driven by household savings. Regarding asset quality, we expect most banks to continue reporting adequate asset quality, benefiting from their sufficient provisions. As for the capital adequacy ratio (CAR), most banks’ CARs are above the CBE’s minimum requirement, and we anticipate a limited effect on their CARs, given the adopted free float exchange rate regime.” Heba Monir added.

HC’s financials analyst concluded: “We forecast CIEB’s net income to grow at a 5-year CAGR of c8%: We forecast CIEB’s net income to grow at a 5-year CAGR of c8% from 2024–29e, compared to c28% from 2019–2024, due to the base year effect as interest rates normalize. We expect FY25’s net income to inch up c1% y-o-y to EGP8.12bn, due to the high cost of funds from the still-high interest rates on CDs issued in 2024. Going forward, we anticipate net income to grow gradually due to an expected decline in the cost of funds and a rebound in lending opportunities, including CAPEX. For NIMs, we forecast it to decline moderately to 9.47% in 2025e from 10.3% in 2024, with a 5-year average of 8.89% over 2025–29e, given the significant contribution of CASA accounts of about c55% to total deposits versus the relatively lower yields on treasuries. As for CIEB’s balance sheet, we estimate the net loans-to-deposits ratio to rise to 57.7% in 2025 from 55.7% in 2024, with a 5-year average of 59.2% from 2025–29e. We estimate net loans to grow at a 5-year CAGR of 16.6%, surpassing the customer deposits’ 5-year CAGR of 14.9%, given the bank’s strategy to maintain high profitability from borrowing activities, with moderate exposure to government treasuries. Thus, we anticipate the bank’s ROE to drop to 35.4% in 2025 from 44.7% in 2024, with a 5-year average of 34.0%.”

About HC Brokerage

Category: Uncategorized

HC: Palm Hills Development, Positioned for expansion

New business ventures and regional expansions, including Abu Dhabi, to add value to the company and serve as catalysts

We forecast EGP423bn in collections over 2Q25–2032e as we expect PHDC to capitalize on its EGP679bn sales inventory

HC: Credit Agricole Egypt – Value play

Egypt’s external position improved on currency liberalization and economic reforms despite external shocks

We expect CIEB to maintain decent profitability despite rate cuts