Talaat Moustafa Group Holding · EGX:TMGH
Talaat Moustafa — Investor Presentation (June 2020)
39 slides from Talaat Moustafa's investor presentation, June 2020
Slide 1: Strategy Presentation June 2020 (1Q2020)
STRATEGY PRESENTATION JUNE 2020 (1Q2020) TMG Holding S.A.E. .م.م.ﻣﺠﻤﻮﻋﺔ ﻃﻠﻌﺖ ﻣﺼﻄﻔﻰ اﻟﻘﺎﺑﻀﺔ ش ( +20 2 3331 2000 Publicly held since 2007 34/36 Mossadek St., Dokki اﻟﺪﻗﻲ، ﺷﺎرع ﻣﺼﺪق٣٤/٣٦ IR@tmg.com.eg EGX: TMGH.CA / TMGH EY ﻣﺼﺮ،اﻟﺠﻴﺰة Giza, Egypt www.talaatmoustafa.com
Slide 2: About TMG Holding
About TMG Holding Talaat Moustafa Group Holding (TMG Holding) a leading conglomerate with special emphasis on developing integrated communities, including but not limited to mixed-use real estate and hospitality projects across Egypt’s key cities. It has an Market capitalization (as at 21 June 2020)
Slide 3: Market capitalization does not capture the value of fully owned land bank
Market capitalization does not accurately capture the value of fully owned land bank and other assets We estimate the market value of our fully owned land bank in Madinaty and Rehab (i.e., fully paid, Market value of fully-paid land bank* carrying no further financial obligations, for which all land
Slide 4: Our footprint
Our footprint Alexandria Greater Cairo Sharm El Sheikh Marsa Alam Luxor Investor presentation 4
Slide 5: Key financial highlights of FY2019
Key financial highlights of FY2019 Revenue Gross profit Recurring +10% y-o-y 2% 10,000 +9% y-o-y 4,000 7% 8,000 3,000 +5% y-o-y 8% 2% EGPmn EGPmn 6,000 +13% y-o-y 5% 4,000 2,000 Further improvement 10% 2,000 1,000 in revenue mix with 7,495 3,432 8,152 3,592 2,834 1,223 3,128 1,384 - - strong growth
Slide 6: Strengthening market lead in 2019
Strengthening market lead in 2019 Total sales* FY2019 new sales reached a robust EGP20.4bn, confirming the company’s unchallenged leadership in terms of market share and its ability to take advantage of the existing demand. EGP20.4bn Despite the brief market slow-down in 2H2019, as evidenced by exte
Slide 7: Largest sukuk issuance completed during 2Q2020
Largest sukuk issuance completed during 2Q2020 During 2Q2020, Arab Company for Projects and Urban Development (Arab Company), the owner of Madinaty and Rehab projects, has successfully issued Islamic sukuk worth EGP2.0bn in a first-of-its kind transaction in Egypt. The issuing company and the sukuk
Slide 8: Key financial highlights of 1Q2020
Key financial highlights of 1Q2020 Revenue Gross profit Recurring 1,500 600 +10% y-o-y 3% +10% y-o-y 5% 500 -0.5% y-o-y 1,000 400 2% EGPmn EGPmn -16% y-o-y 300 9% Well-optimized 500 200 22% revenue mix with 1,201 980 1,316 976 100 477 372 523 312 - - 17% significant portion 1Q2019 1Q2020 1Q2019 1Q20
Slide 9: Robust business model and the COVID-19 pandemic
Robust business model and the COVID-19 pandemic Total sales* FY2019 new sales reached a robust EGP20.4bn, confirming the company’s unchallenged leadership in terms of market share and its ability to take advantage of the existing demand. 1Q2020 sales reached 2.2bn, reflecting negative pressures on t
Slide 10: TMG at a glance
TMG at a glance [TMGH.CA/TMGH EY] as at FY2019 and 1Q2020 MENA’s leading developer(1) over 90k / 3.6k / 431 units c100k+ units delivered 905 operational hotel #1 Egyptian RE developer sold rooms by market cap (since inception, including ministry units) (since inception / FY2019 / Highest cumulative
Slide 11: We continue achieving strong sales and expanding our market share
We continue achieving strong sales and expanding our market share Evolution of total sales across all projects Evolution of non-residential sales across all Evolution of residential sales across all projects projects 25.0 20.0 6.0 18.0 20.0 5.0 16.0 14.0 15.0 4.0 12.0 EGPbn EGPbn EGPbn 10.0 3.0 10.0
Slide 12: Low-risk business model shielded by recurring income and low leverage
Low-risk business model shielded by recurring income and low leverage REAL ESTATE DEVELOPMENT BUSINESS MODEL RECURRING INCOME LINES § Low-risk, self-financed off-plan development model leveraging on longstanding § Reliable source of cashflow to finance growth and dividends marketing and engineering
Slide 13: We continue to deliver on our key strategic priorities
We continue to deliver on our key strategic priorities previously communicated to the market Backlog [EGPbn] 49.4 Achieving robust sales and expanding market share 43.3 1Q2019 1Q2020 The Group invested EGP1bn to increase its stake in ICON to 83.3% Continue building our recurring income portfolio – S
Slide 14: Strategic vision allowed for early foothold in East Cairo
Strategic vision allowed for early foothold in rapidly urbanizing East Cairo Madinaty Rehab THE 5th SETTLEMENT NEW ADMINISTRATIVE CAPITAL Celia <- to Central Cairo to Suez -> Source: Google Earth Investor presentation 14
Slide 15: Madinaty – a full-fledged booming international city
Madinaty – a full-fledged booming international city in the heart of East Cairo Madinaty is TMG’s flagship mixed-use city in East Cairo spanning over a Land area massive area of 33.6 km2, launched in 2006 and to be fully completed by 117k residential Over 4mn sqm of 2035 33.6 km2 units non-residenti
Slide 16: Madinaty master plan
Madinaty master plan – incorporating a solid long-term vision ahead of its time World-class planning and vision Designed by renowned international architects, such as Sasaki, SWA, HHCB, Dar, F+A, HR&A, among others Provides for tranquility of residential quarters and immediate accessibility to comme
Slide 17: Privado – further diversifying the product of Madinaty
Privado – further diversifying the product of Madinaty A value proposal leveraging on quality services Centrally located… of Madinaty paired with tranquility of a gated 276 feddans 1.1mn sqm Privado will grant its residents Privado land area Total residential area compound… an easy access to top-not
Slide 18: Privado perspectives
Privado perspectives Investor presentation 18
Slide 19: Case in point: successful launch and sales of Celia
Case in point: successful launch and sales of Celia – a testament to the strength of TMG brand Unmatched brand equity of TMG in the Egyptian 3,567 units (c47%) market 500 feddans 1.07mn sqm Total residential area sold until Celia land area end-1Q2020 Celia is a new mixed-use development located on 5
Slide 20: Continue investing in hotel portfolio
Continue investing in hotel portfolio Hospitality segment performance Freed liquidity from monetizing non-core assets and invested EGP1.0bn in ICON in a value accretive 1,800 60% transaction, increasing stake in TMG’s yielding hospitality 1,600 50% segment to 83.3% 1,400 1,200 40% 443 new keys under
Slide 21: Continue building recurring income portfolio – hotels
Continue building our recurring income portfolio – target 40-45% of consolidated gross profit Revenue and occupancy rate Hotel rooms evolution 1,800 1,600 346 1,348 1,400 68% 71% 97 1,200 EGPmn 1,000 905 800 600 400 200 1,430 1,603 0 FY201 8* FY201 9 2019 2021 FS Sharm El Sheikh Ext. Jun-202 3 Four
Slide 22: Summary of hotel KPIs across all properties
Summary of hotel KPIs across all properties Four Seasons Nile Plaza KPIs* Kempinski Nile Hotel KPIs ARR Occupancy (RHS) Revenue ARR Occupancy (RHS) Revenue 87.3% 300 75.0%79.7% 84.7% 100% 1,000 150 81.1%86.0% 100% 200 250 64.7% 73.2% 69.5% 80% 65.7% 80% 800 150 200 100 EGPmn 60% 600 60% USD USD EGP
Slide 23: Continue building recurring income portfolio – retail
Continue building our recurring income portfolio – target 40-45% of consolidated gross profit Retail GLA Retail revenue grows in significance 140 250 120 200 100 78 80 k sqm 150 EGPmn 60 127.5 40 100 20 49 50 0 Leased GLA Open Air mall opening Total GLA 180 237 (start operations over - 2019) FY201 8
Slide 24: Catchment of Madinaty City Center
Catchment of Madinaty City Center 40km 10km Madinaty City Center primary catchment area covers the populations of Al Shoruk and Al Badr Cities, New Administrative Capital, El Mostakbal City and many smaller gated compounds Secondary catchment area extends to Nasr City and Heliopolis neighborhoods an
Slide 25: Success of Open Air Mall is a testimony for Madinaty's potential
Success of Open Air Mall is a solid testimony for Madinaty’s potential Open Air Mall is the newest hot retail spot of East Cairo A new regional mall in Madinaty built on 406k sqm of land on Northern edges, immediately surrounded by residential communities within the project and with easy access from
Slide 26: Continue building recurring income portfolio – clubs
Continue building our recurring income portfolio – target 40-45% of consolidated gross profit Club revenue grows in significance Club memberships – sold and remaining 1,000 250 900 800 200 700 k memberships 600 150 EGPmn 500 150 400 100 197 300 200 50 100 47 579 865 - 0 FY2018 FY2019 Sold membership
Slide 27: Sporting clubs perspectives
Sporting clubs perspectives Investor presentation 27
Slide 28: Maintain robust growth in sales in existing projects: The Spine
Maintain robust growth in sales in existing projects The Spine(1) Fully integrated residential complex including retail, leisure, hospitality, and offices designed to international standards 2.7mn sqm land area 4.5mn sqm total BuA(2) 13 years of development Downtown 2.3mn sqm of residential BuA Civi
Slide 29: The Spine perspectives [1/2]
The Spine perspectives [1/2] Strategic location, unique accessibility, superior standards and quality infrastructure Investor presentation 29
Slide 30: The Spine perspectives [2/2]
The Spine perspectives [2/2] Fully integrated residential complex including retail, leisure, hospitality, and offices designed to international standards Investor presentation 30
Slide 31: The Spine concept
The Spine concept Entertainment and mixed-use Family and nature Sophisticated living Privado neighborhood Uptown Parkside Each district is tailored for a specific target audience: Downtown: seniors, families and youth Parkside: families and youth Downtown Uptown: professionals Investor presentation
Slide 32: The Spine – a new heart of East Cairo
The Spine – a new heart of East Cairo, securing long-term recurring income Our development track-record and communities that we have created has given us a unique opportunity to develop a state-of-the-art retail and commerce center, the downtown area of Madinaty, aka the Spine. We have finalized the
Slide 33: Maintain robust growth in sales in existing projects
Maintain robust growth in sales in existing projects ■ EGP15bn of net cash flow from backlog and ■ EGP49.4bn of backlog Historical sales delivered units ■ Avg. gross profit margin 30%-35% ■ Land bank sufficient for the next 16 years ■ Sell all remaining units in Al Rehab and Al Unlaunched residentia
Slide 34: Monetize value of certain assets at the right timing
Monetize value of certain assets at the right timing ■ We believe that today the market does not ascribe value to most of our recurring income portfolio (namely hotels, retail, clubs, and non-residential land bank) which offers a significant long-term upside for equity investors Potential monetizati
Slide 35: Disciplined and selective land acquisition approach
Disciplined and selective land acquisition approach Strategic acquisition criteria Financial acquisition criteria ■ Large plots that allow for the development of urban ■ Preference towards cash acquisitions to manage communities targeting the middle to upper middle financial risk classes ■ Opportuni
Slide 36: Preserving capital appreciation while providing a dividend stream
Preserving capital appreciation while providing a dividend stream Net cash from contracted sales ■ cEGP15bn net cash flow pre-tax from backlog sales ■ 11mn sqm (BuA) of BTS residential Net cash from future residential Avg. sales price of at least EGP20k/sqm at assets to be launched launches ■ Averag
Slide 37: Focused on corporate responsibility
Focused on corporate responsibility BUILDING SUSTAINABLE ENABLING ECONOMIC FOCUSED ON SOCIAL COMMUNITIES GROWTH IMPACT § Shariah compliant – no exposure to alcohol sales As a leading developer in Egypt, TMG continues to § Serving population of some 700 thousand or gambling build self-sufficient sust
Slide 38: Share price performance compared to indices since 2H2017
Share price performance compared to indices since 2H2017 Share price performance of TMGH compared to EGX indices Key facts 16.0 14.0 Listed on EGX since 2007 12.0 c2,063mn shares outstanding 10.0 EGP 8.0 No foreign ownership limits 6.0 Shariah compliant 4.0 Reuters/BBG: TMGH.CA/TMGH EY 2.0 May-1 8 M
Slide 39: Thank you
Hk =r Thank you TMG Holding
Talaat Moustafa Group Holding — Investor Presentation (June 2020) on 6ix