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 27th Jan – 23rd Mar 2011)

PHDC.CA/PHDC EY | Hold Recommendation | High Risk | LTFV EGP5.0 | Target Price EGP2.3 | Analyst: Hany Samy

Key Performance Indicators

EGP mn/ FY End:December 2007a 2008a 2009a 2010a 2011e 2012e

Revenue 535.0 1,234.8 1,145.8 1,831.0 3,214.5 4,150.5 Growth Rate (%) n/m 130.8 -7.2 59.8 75.6 29.1EBITDA 282.8 743.6 530.1 649.5 1,299.4 1,692.4 Growth Rate (%) n/m 162.9 -28.7 22.5 100.1 30.2EBITDA margin (%) 52.9 60.2 46.3 35.5 40.4 40.8Net Income 188.9 657.7 475.6 526.4 951.0 1,346.1 Growth Rate (%) n/m 248.3 -27.7 10.7 80.7 41.5Net margin (%) 35.3% 53.3% 41.5% 28.7% 29.6% 32.4%

P ER 12.7x 3.6x 5.0x 4.5x 2.5x 1.8xP /BV 2.3x 0.9x 0.8x 0.5x 0.4x 0.4xEV/EBITDA 9.5x 4.0x 6.4x 5.1x 2.3x 1.8xNet debt/EBITDA 1.0x 0.8x 1.9x 1.4x 0.5x 0.4xDividend Yield N/A N/A N/A N/A N/A N/A

Source: CICR Database

Sector: Housing & Touristic Real EstateISIN: EGS655L1C012Last P rice (EGP ) 2.2852 Week High 6.4252 Week Low 1.44100-day Av. Volume 3,082 (000' shares per day)

No. of Shares (mn) 1,048.3 Market Cap (EGP mn) 2,390 *P rices as at close on 30th May 2011

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Shrs ('000)EGP Volume PHDC EGX 30 rebased