Madinet Masr Reports Results for 9M 2023
Madinet Masr achieves stellar
nine-month results as both gross contracted sales and net profit more than
double year-on-year, reflecting successful project launches and a robust
strategy.
Madinet Masr, one
of Egypt’s leading urban community developers, announced on 9 November 2023 its
standalone financial results for the nine-month period ended 30 September 2023
(9M 2023), reporting a net profit of EGP 1.4 billion on total revenue of EGP 4.4
billion. The Company
reported a net profit of EGP 773.2 million for the quarter ended 30 September
2023 (Q3 2023), booking a top line of EGP 2.2 billion
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Key Highlights ·
Madinet Masr set a new record generating gross contracted sales
of EGP 14.9 billion for 9M 2023, up by 121.9% y-o-y as the Company expanded
and unit sales grew. Newly acquired subsidiaries – Minka and EgyCan – booked
EGP 2.2 billion in contracted sales which were not consolidated in Madinet
Masr’s results, bringing total contracted sales to EGP 17.1 billion. On a
quarterly basis, gross contracted sales reached EGP 9.6 billion in Q3 2023,
an increase of 192.4% y-o-y. ·
The Company delivered a total of 792 units during 9M 2023, down 28.8%
y-o-y, due to a higher inventory of ready-to-move in units 2022. In Q3 2023,
Madinet Masr delivered a total of 314 units, up by 11.7% y-o-y. ·
Revenue recorded EGP 4.4 billion for 9M 2023, up by 48.0% y-o-y,
supported by strong gross contracted sales growth. On a quarterly basis, revenue
reached EGP 2.2 billion in Q3 2023, an increase of 85.2% y-o-y. ·
Gross profit came in at EGP 2.9 billion in 9M 2023, rising 134.3%
y-o-y. Madinet Masr’s gross profit margin expanded to 64.9% in 9M 2023 from 41.0%
in 9M 2022, reflecting increased revenue from new sales with higher margins
as compared to revenue from unit delivery with lower margins. In Q3 2023,
gross profit recorded EGP 1.5 billion, climbing 120.2% y-o-y, with an
associated gross profit margin of 67.1% versus 56.5% in Q3 2022. ·
Madinet Masr recorded an EBITDA of EGP 1.9 billion for 9M 2023,
a 122.4% y-o-y increase, yielding an EBITDA margin of 43.5% for the period
compared to 28.9% in 9M 2022. On a quarterly basis, EBITDA recorded EGP 1.1 billion
for Q3 2023, up by 127.8% y-o-y with an associated margin of 47.2% against
the 38.4% booked for Q3 2022. ·
The Company achieved a net profit of EGP 1.4 billion for 9M
2023, rising 149.2% y-o-y with a corresponding net profit margin of 30.6%
against the 18.2% booked for 9M 2022. Net profit came in at EGP 773.2 million
for Q3 2023, up by 151.0% and yielding an enhanced net profit margin of 34.5%
versus 25.4% in Q3 2022. ·
Net debt stood at EGP 455.7 million at the close of 9M 2023,
marking a 67.2% year-to-date decrease, in line with Madinet Masr’s strategy
to optimize efficient utilization of borrowing to support growth and manage
financial risk. The net debt/EBITDA ratio stood at 0.2x as of 30 September
2023, down from 1.2x at year-end FY 2022.[1]
·
Net notes receivable recorded EGP 4.2 billion as of 30 September
2023, up by 5.1% from year-end 2022, yielding a receivables/net debt ratio of
9.1x for 9M 2023, up from 2.8x at the close of FY 2022. Total accounts and
notes receivable, including off-balance sheet PDCs for undelivered units,
amounted to EGP 24.9 billion, up 75% from EGP 14.2 billion as of 31 December
2022. ·
Cash collections booked EGP 3.7 billion in 9M 2023, up by 42.0%
y-o-y. On a quarterly basis, the Company made collections of EGP 1.8 billion
in Q3 2023, an increase of 78.9% y-o-y. ·
Madinet Masr deployed EGP 1.5 billion in construction and
infrastructure CAPEX during 9M 2023, up from an outlay of EGP 1.3 billion in 9M
2022, due to ongoing construction primarily at Taj City. Total new
construction contracts awarded in 9M 2023 reached EGP 3.7 billion. In Q3
2023, CAPEX expenses booked EGP 596.6 million, up from the EGP 542.0 million
deployed in Q3 2022. |
Management Comment
As we approach the end of 2023, I am pleased to
share yet another robust set of results for Madinet Masr, which saw us achieve
remarkable growth in 9M 2023 all while making evident progress on our new growth
strategy.
Our unwavering dedication to growth and
innovation, the dedication of our talented team, and a solid strategic vision
have allowed us to carry forward the momentum from the beginning of the year.
Madinet Masr delivered outstanding results with gross contracted sales
increasing more than two-folds year-on-year reaching an impressive EGP 14.9
billion, in addition to EGP 2.2 billion at Minka and EgyCan. These exceptional
achievements have translated into robust financial results that exceed our
targets. Consequently, our revenue surged 48% year-on-year to EGP 4.4 billion
and net profit more than doubled year-on-year to EGP 1.4 billion, underlining
our strong financial performance.
In line with our commitment to foster
innovation and remain at the forefront of the Egyptian real estate market, I am
delighted with the launch of our new R&D arm “Madinet Masr Innovation
Labs”. Innovation Labs will be instrumental in driving forward the Company's
vision for groundbreaking and cutting-edge solutions in the real estate space.
Our latest product is “Touba”, a platform that revolutionizes the concept of
buying and investing in real estate by leveraging digital capabilities and
addressing homeowners’ evolving needs.
As we look ahead, we are optimistic about the
potential opportunities that lie in our path and confident in our ability to navigate
challenges while capitalizing on these opportunities. We are encouraged by
Egypt’s ever-resilient real estate market fundamentals and look forward to
closing the year on a positive note
Operational
Performance
Gross Contracted Sales
Madinet Masr booked gross
contracted sales of EGP 14.9 billion during 9M 2023, increasing 121.9%
y-o-y from EGP 6.7 billion in 9M 2022. Approximately 69.4% (EGP 10.3 billion)
of Madinet Masr’s gross contracted sales for 9M 2023 were recorded at Taj
City, the Company’s 3.6-million-sqm mixed-use development in the eastern
suburbs of Cairo. Meanwhile, 30.4% (EGP 4.5 billion) of Madinet Masr’s gross
contracted sales for 9M 2023 were generated at Sarai, a 5.5-million-sqm
mixed-use project near the New Administrative Capital on the Cairo-Suez Road.
On a quarterly basis, the Company booked gross
contracted sales of EGP 9.6 billion for Q3 2023, up 192.4% y-o-y from the EGP 3.3
billion booked in Q3 2022. Taj City accounted for 72.4% (EGP 6.9 billion) of
the quarter’s gross contracted sales, Sarai accounted for 27.3% (EGP 2.6 billion),
while other projects accounted for the remaining 0.3% (EGP 28.3 million).
Madinet Masr sold a total of 1,530 units during Q3 2023, up by 39.0% from the
same quarter of the previous year. Taj City sold 1,033 units in Q3 2023 (Q3
2022: 510), 489 units were sold at Sarai (Q3 2022: 591), while 8 units were
sold in other projects.
Cash
Collections
Madinet Masr made cash collections of EGP 3.7 billion
for 9M 2023, 42.0% above the figure of EGP 2.6 billion collected in 9M 2022. The
Company booked a cumulative delinquency rate of 2.0% at the end of 9M 2023,
down from the rate of 3.8% reported for 9M 2022. The decrease in the
delinquency rate reflects the Company’s continuous efforts to remove
nonperforming contracts from its receivables portfolio.
Cash collections totaled EGP 1.8 billion in Q3
2023, an increase of 78.9% y-o-y against the EGP 989.6 million collected one
year previously. The quarter’s delinquency rate stood at 1.8% for the quarter down
from 3.6% in Q3 2022.
Cancellations
Cancellations stood at EGP 635.3 million
for 9M 2023, down substantially compared to EGP 1.7 billion in 9M 2022, due to
the prevalent economic environment. As a percentage of Madinet Masr’s gross
contracted sales, cancellations booked 4.3% during 9M 2023, down from a rate of
25.4% recorded in 9M 2022. The cancellation rate continues to be below the
typical rate of 10-15%.
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Deliveries |
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The
Company delivered 792 units across its developments during 9M 2023, down
28.8% y-o-y from the 1,113 deliveries recorded for 9M 2022, due to a higher
inventory of ready-to-move in units 2022. In 9M 2023, Madinet Masr
completed 691 handovers at Sarai (9M 2022: 657), 99 handovers at Taj City (9M
2022: 436) and 2 handovers at Nasr Gardens (9M 2022: 20), a subsidized
housing project Madinet Masr recorded 314 deliveries in Q3
2023, up by 11.7% from the 281 units recorded for Q3 2022. The Company
delivered 34 units at Taj City during the quarter (Q3 2022: 77), 280 units at
Sarai (Q3 2022: 198) and no units at Nasr Gardens (Q3 2022: 6).
CAPEX Madinet Masr deployed construction and
infrastructure CAPEX of EGP 1.5 billion during 9M 2023 up from EGP 1.3 billion
in 9M 2022. The Company’s construction and infrastructure investments at Taj
City amounted to EGP 913.7 million in 9M 2023, against EGP 636.5 million for 9M
2022. At Sarai, Madinet Masr recorded a construction and infrastructure CAPEX
spend of EGP 410.9 million for 9M 2023, against EGP 634.4 million for 9M 2022.
Construction and infrastructure CAPEX at other projects totaled EGP 197.5
million for 9M 2023, up from the EGP 70.0 million recorded one year previously.
Total new construction contracts awarded in 9M 2023 reached EGP 3.7 billion.
Madinet Masr made construction and
infrastructure CAPEX outlays of EGP 596.6 million for Q3 2023, up from the EGP 542.0
million booked in Q3 2022. CAPEX spending reached EGP 368.0 million at Taj City
(Q3 2022: EGP 363.2 million), EGP 105.9 million at Sarai (Q3 2022: EGP 158.1
million), and EGP 122.7 million at other projects (Q3 2022: EGP 20.7 million). The
overall change in CAPEX for Q3 2023 comes following Madinet Masr’s launch of
Zahw in Assiut.
Land
Bank Madinet Masr held a land bank measuring
9.6 million sqm at the close of 9M 2023. The Company’s primary land bank is
strategically located in Greater Cairo (Taj City and Sarai). The land is owned
in freehold, imparting significant competitive advantages to Madinet Masr. As of
30 September 2023, 37.9% of Madinet Masr’s land bank was held at Taj City,
57.5% at Sarai and 4.6% at Zahw Assiut.
At Taj City, 72.6% of the land area was under
development at the close of 9M 2023, with unlaunched residential projects and
unlaunched nonresidential projects accounting for 4.7% and 22.6%, respectively.
At Sarai, 45.1% of the total land area was under development in 9M 2023, with
unlaunched residential projects and unlaunched nonresidential projects
accounting for 40.2% and 14.7%, respectively
As of 9M 2023, Madinet Masr’s 437 thousand sqm land
bank in the Assiut region of Upper Egypt was under development, marking the
Company’s geographical expansion beyond the Greater Cairo area
Financial
Performance Income
Statement The Company booked revenues of EGP 4.4 billion
in 9M 2023, climbing 48.0% y-o-y from a figure of EGP 3.0 billion in 9M 2022.
Revenue growth for the nine-month period reflects strong gross contracted sales
value.
Deliveries generated EGP 1.1 billion in revenue
during 9M 2023, down 35.6% y-o-y, while new sales generated EGP 3.1 billion in
revenue during the first nine-months of the year, up by 89.9% y-o-y. Revenue
from unit deliveries contributed 26.1% of the Company’s gross 9M 2023 sales
revenue of EGP 4.2 billion before cancellations, land sale, installment
interest and rental revenue. Meanwhile, revenue from new sales accounted for 73.9%
of the Company’s gross revenue for the nine-month period. At the close of 9M
2023, Madinet Masr had an unrecognized revenue backlog of EGP 21.8 billion,
calculated at the nominal price of undelivered sales.
Madinet Masr recorded revenue of EGP 2.2 billion
for Q3 2023, up by 85.2% y-o-y. Delivery revenue represented 18.3% of the
Company’s gross top line during Q3 2023, while revenue from unit sales
contributed 81.7% for the quarter.
Gross
Profit
Madinet Masr recorded a gross profit of EGP 1.5
billion for Q3 2023, up by 120.2% y-o-y, with an improved GPM of 67.1% for the
quarter compared to 56.5% in Q3 2022.
Sales,
General & Administrative Expense Sales, general & administrative (SG&A)
expenses came in at EGP 1.0 billion for 9M 2023, expanding 108.8% y-o-y from
the outlay of EGP 490.0 million recorded for 9M 2022. SG&A expenses rose primarily
due to a 121.9% increase in gross contracted sales during the period. As
percentage of revenues, SG&A expense came in at 23.0% for 9M 2023, up from 16.3%
one year previously. SG&A expenses booked EGP 462.5 million for
Q3 2023, up by 112.1% y-o-y. SG&A expenses recorded 20.6% as a percentage
of revenues in Q3 2023, up from the figure of 18.0% booked for Q3 2022.
Interest
Expense Interest expense recorded
EGP 238.3 million in 9M 2023, up from EGP 224.0 million for 9M 2022. On a
quarterly basis, interest expense recorded EGP 85.3 million in Q3 2023, up from
EGP 76.7 million in the same quarter last year. The increase in Madinet Masr’s
interest expense reflects interest rates hikes.
In Q3 2023, Madinet Masr recorded an EBITDA of
EGP 1.1 billion, up by 127.8% y-o-y, yielding a margin of 47.2% versus 38.4% in
Q3 2022.
Net
Profit
Madinet Masr recorded a net profit of EGP 773.2
million for Q3 2023, up by 151.0% y-o-y. The Company’s NPM booked 34.5% for the
quarter, up from 25.4% in Q3 2022.
Balance
Sheet
Cash
& Cash Equivalents On the balance sheet front, Madinet Masr held cash
and cash equivalents of EGP 1,759.5 million excluding customer maintenance
deposits as of 30 September 2023, down 4.2% from EGP 1,836.8 million at the
close of 2022, primarily due to the repayment of a syndicated loan.
Debt As of 30 September 2023, Madinet Masr had
outstanding debt of EGP 2.2 billion, down 31.3% from the of EGP 3.2 billion
booked at year-end 2022, due to the full repayment of a syndicated loan. The
Company’s debt/equity ratio stood at 37.6% as of 30 September 2023, a
decrease from the level of 66.2% posted at the close of 2022. Net debt
came in at EGP 455.7 million as of 30 September 2023, down from EGP 1.4 billion
at the close of 2022. Madinet Masr recorded a net debt/EBITDA ratio of 0.2x
as of 30 September 2023, down from 1.2x as of 31 December 2022. The Company’s
strategy is to optimize efficient utilization of borrowing to support growth
and manage financial risk.
Notes
Receivable Madinet Masr held EGP 4.2 billion in net notes
receivable at the close of 9M 2023, of which EGP 2.2 billion were
short-term receivables, EGP 1.7 billion long-term receivables and EGP 267.3
million were due from customers. Total accounts and notes receivable as of 30
September 2023, including off-balance sheet PDCs for undelivered units amounted
to EGP 24.9 billion, up 75% from EGP 14.2 billion as of 31 December 2022. The
Company closed an EGP 805 million securitization transaction during the first quarter
of the year, bringing its cumulative gross securitized receivables to EGP 1.6 billion
as of 30 September 2023. Receivables to net debt stood at 9.1x by the
end of 9M 2023, up from the 2.8x recorded at year-end 2022.
PP&E PP&E, fixed assets under construction, and
property investments booked
EGP 61.9 million at the close of 9M 2023, up from the EGP 57.0 million booked at
the close of 2022.
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