SODIC eyes securitising receivables, keeps New Capital on radar to expand land bank

The company is expected to see about 40,000 sqm of commercial built-up area come online in FY 2020/21

  
A car drives past Egyptian developer SODIC headquarters building on the outskirts of Cairo, Egypt November 13, 2016.

A car drives past Egyptian developer SODIC headquarters building on the outskirts of Cairo, Egypt November 13, 2016.

REUTERS/Amr Abdallah Dalsh

A source has exclusively told Daily News Egypt that the Six of October Development and Investment – SODIC (OCDI), is looking into securitising receivables.

The source also said that the company’s targets for fiscal year (FY) 2020/21 are awaiting Board of Directors approval, and will be released in due course. Alongside this, the company is expected to see about 40,000 sqm of commercial built-up area (BUA) come online in FY 2020/21.

He added that the company continues to seek opportunities to expand its land bank and is keeping the New Administrative Capital (NAC) on its radar, particularly as the company is looking to expand its recurring income portfolio.

Naeem Research sees that, excluding OCDI’s Malaaz development from the company’s EGP 8.4bn sales target, sales for FY 2019/20 are looking good in terms of meeting the company’s target.

Malaaz was not launched in FY 2019/20, although the company is optimistic about the project potentially coming on line this upcoming summer. Selling prices increased in FY 2019/20, with different projects witnessing price growths ranging from 7.0% to 24.0%.

Naeem Research added that revenue in FY 2019/20 could be slightly lower year-on-year (y-o-y), but that gross profit would be higher y-o-y due to the delivery mix being lower in value and higher in margin.

The skeleton/concrete portion of construction forms around 25.0%-30.0% of the company’s total cost. The company expects to increase debt in FY 2020/21.

OCDI has EGP 9.1bn in liquidity sources, split between: EGP 2.5bn in cash and equivalents, which exclude EGP 1.2bn in project maintenance deposits; EGP 3.9bn in short-term receivables; and EGP 2.7bn in unutilised credit facilities.

This compares to OCDI’s fixed commitments in FY 2020/21 of EGPc981.0m, split across: EGP 229.0m in fixed land payments; EGP 317.0m in revenue share minimum guarantees; and EGP 435.0m in bank debt repayments.

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