Sixth October Development and Investment Company (SODIC) is targeting EGP 8.7bn of contracted sales in 2018, a 55% growth over the 2017 annual sales guidance, as the company mulls growth and expansion in the Egyptian market, Managing Director Magued Sherif said at a press conference on Thursday.
Sherif added that some 1,048 units are scheduled for delivery in 2018, with an expected value of EGP 3.9bn in revenues.
“The ambitious targets set for the year echo SODIC’s confidence in the stability of the Egyptian real estate market and its credible position which continues to set it apart,” Sherif confirmed.
He added that SODIC endeavours to close on several land deals during 2018 with expectations of new launches in the North Coast and west Cairo.
“Supported by a strong financial position, SODIC continues to pursue viable land opportunities with the aim of further growing its land bank and diversifying its product offering,” he explained.
SODIC’s revenues grew 11% to EGP 2.3bn as the company continues timely deliveries across all its projects.
Deliveries in Eastown Residences contributed to 55% of the delivered value.
The year also witnessed the commencement of deliveries in the Westown Courtyards development, which contributed up to 12% of the delivered value.
Gross profit increased by 11% to EGP 883m, reflecting a healthy gross margin of 39% versus 38% recorded during 2016.
“The resilience of SODIC’s gross margins during such a remarkably inflationary environment attests again to its disciplined approach to construction and commitment to timely delivery. Margins achieved on Eastown Residences reached 35%, compared to 23% in 2016, with the delivery of later phases in the project,” Sherif added.
Operating profit increased by 17% to EGP 478m, reflecting a healthy operating margin of 21%, strong resilience, and prudent control of operating expenses despite the inflationary backdrop the country suffered post-devaluation in November 2016.
Net profit post-non-controlling interest for the year came in at EGP 597m, with a margin of 26%, versus 21% in 2016.
SODIC delivered an earnings per share (EPS) of EGP 1.74 in 2017 reflecting a 39% growth driven by resilient operating profitability as well as higher interest income generated by cash balances that have been mainly invested into treasury bills during the year to benefit from the high interest rate environment.
The company’s total cash and cash equivalents balance stood at a level of EGP 3.6bn, expressing the strength of the financial position and supporting the company’s construction pipeline as well as its land bank expansion plans.
Receivables continued to grow, reaching EGP 11.2bn, providing strong visibility into the company’s future inflows.
Net contracted sales came in at EGP 5.7bn for all projects, with developments in east Cairo showing particular strength growing by 24% and 17% in values and volumes respectively.
Last year witnessed the launch of several new projects, including SODIC’s first revenue share co-development with Heliopolis Company for Housing and Development—SODIC East—with the first phase of single family homes being launched in the last quarter contributing over EGP 1.7bn to the year’s sales.
Other launches included Villette New Cairo’s multiple family Sky Condos homes in east Cairo, as well as October Plaza and One16 in west Cairo. Combined, these four projects have given SODIC circa EGP 70bn of inventory expected to be sold over the coming 10 years. The strong performance of these launches constituted the main driver for achieving the company’s stated guidance for sales in 2017.
In terms of standalone results, SODIC logged EGP 154.25m, down from EGP 222.56m in 2016, the statement showed.
SODIC had previously posted a 52.9% year-over-year surge in consolidated profits to EGP 166.2m in the third quarter of 2017, backed by an increase in revenues, compared to EGP 108.7m in the same period of 2016.
In February, Sherif told CBC Extra in an interview that the revenue guidance for SODIC in 2018 would be higher than last year, indicating that revenues are expected to stand at EGP 8.7bn this year.
He added that the company had no intention to distribute cash dividends for 2017, noting that SODIC was looking to set a clear and fixed policy for dividend distributions so as not to affect its expansions.