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Egypt's Talaat Moustafa Group H1 profit falls 44 on political turmoil

Country's biggest listed developer feels the broader economic pain with profits falling from LE662.4 million against the same period in 2010

Reuters, Wednesday 10 Aug 2011
Talaat Moustafa Group
Talaat Moustafa Group
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Talaat Moustafa Group , Egypt's biggest listed developer, saw first-half net profit slide 44 percent as a popular uprising and industry turmoil dented its hotels business and disrupted deliveries of new homes.

The firm, which has suffered the brunt of a crisis in Egypt's once-booming real estate industry, made a profit of 371.2 million Egyptian pounds ($62.3 million), down from 662.4 million pounds last year, the bourse said on Wednesday.

A legal challenge to TMG's flagship Madinaty development last year sparked a sector crisis that worsened with the ousting of Egyptian President Hosni Mubarak in February.

TMG's profit slump was expected, given the weakness in hotels and deliveries of homes, said HC analyst Ankur Khetawat.

"It's still not really bad, as long as they are making profits," said Khetawat. "They have a decent amount of deliveries sustaining their bottom line ... In terms of existing properties, customers are paying."

The company would only bear the full brunt of its latest troubles years from now, he said.

Revenue totalled 2.5 billion pounds, down from 3.5 billion in the first half of 2010.

Cashflow was in a better state than with peer Palm Hills , but TMG's plight still means it must tread carefully in trying to expand its business, said Khetawat.

TMG shares have lost half their value this year, compared with a drop of one-third in Egypt's benchmark EGX30 index .

Its shares were up 5.2 percent on Wednesday, part of a broader market rebound from three days of steep declines.

Khetawat said the stock was trading "a lot" below fair value.

Investors are waiting to see how Egypt's interim government fares in restoring confidence in the property sector, protecting homebuyers and limiting the fallout from a string of court challenges to sales of state land.

The $3 billion Madinaty project, which makes up the bulk of TMG's land bank, has been caught in a legal dispute since September, when a court upheld a ruling to scrap the land sale contract because it was not publicly auctioned.

Madinaty, a new urban centre on the desert outskirts of Egypt's cluttered capital Cairo, would have 600,000 inhabitants if fully completed, with shopping centres, schools, hotels and business centres

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