Amer Group - Initiation of Coverage - September 2016

PRIME INVESTMENT RESEARCH AUTOMOTIVE |EGYPT

GB AUTO – INITIATION OF COVERAGE JANUARY, 14TH

2016

PRIME INVESTMENT RESEARCH

HOUSING|EGYPT AMER GROUP – INITIATION OF COVERAGE

SEPTEMBER, 29TH 2016

We initiate coverage on Amer with a fair value of EGP 0.266/share, we valued Amer Group using SoTP valuation, utilizing an average WACC of 21.5%; a perpetual growth rate ranging within 2-3%, resulting in a downside potential of 5.1% from the current trading level. Hence, we recommend investors to start reducing position gradually.

Amer Group, post split business model is supposed to be a pure recurring income dependent; however, we believe the recurring income segments being mainly located in touristic destinations does not secure the group`s future. The group also has plans to become a land owner, and replicate the co-development agreement model followed with Porto Group. We do not account for such scenario over the horizon due to the lack of visibility. And we do not actually believe such business plan to be value additive in the future, due to the current scarcity of land areas in Satellite cities and touristic destinations. In addition to the rapid inflationary nature in land prices currently observable; hence, squeezing margins already. We mean that a revenue share agreement of 14-20% as the agreements range conducted, leaves little margin insufficient to add value for the developing partners. The current real estate segment recognition ends by 2019 as per our estimation, adding EGP 3.8bn from recognizing the current backlog and outstanding inventory, added to EGP 123.1mn of royalty fees thanks to Porto Group huge remaining BUA, as royalty fees are collected as 1% from all Porto Group`s domestic projects sales. We also account for EGP 1.33bn from the current co-development agreements with Porto Group in return for Amer group land contribution. Current restructuring plans for the hospitality and retail segments following the restaurants chains restructuring, leads to the assumption of lower overheads and operating expenses as the company starts utilizing its current employees. However, we do not believe such segments capable of maintaining Amer Group`s valuation beyond recognizing the RE backlog and inventory, as we anticipate the turnaround to come gradually. We expect the malls segment to add EGP 248.0mn in 2016-2020 to revenues, hotels to generate EGP 880.6mn and restaurants to add 1,105.2mn. Although revenues might be going upward as a matter of inflation, costs might surpass such increases due to increases in utilities costs, on the back of EGP floatation and subsidies removal. Amer Group announced plans for reaching a total Gross Leasing Area of 510k Sqm; however we did not account for the under-construction or licensing areas, and only account for 62.3k sqm due to the removal of Porto Cairo Mall GLA. We currently account for 62.3k sqm of GLA as we exclude meeting point indoor area, due to management plans to turn it into office area for sale that we do not account for in our valuation. We also did not account for the management`s plans for expanding its restaurants` chains in the GCC and other locations beyond the reported 48 restaurants in 1H2016, until the management successfully adds up such locations. Over the horizon, we do not expect impressive performance from all of the recurring segments as they are already suffering from high competition, and operating inefficiency. We believe the current business model is heavily distorted, we revise our previous thoughts on the split as we go for more scrutiny; it adds no value while eliminating the synergy all other RE developers enjoy. In addition to that Amer plans of constructing more than 28k new units (more than that sold since inception) is a complete and straight forward deviation from the announced business model to be followed.

AMER GROUP … after going through more scrutiny, we see a distorted

business model, added to major conflicts of interest monitored

“REDUCE” MARKET PRICE EGP 2.080 FAIR VALUE EGP 2.266 DOWNSIDE 5.1%

INVESTMENT GRADE “SPECULATIVE”

Stock Data Outstanding Shares [in mn] 4,559.5 Mkt. Cap [in mn] 1,276.7 Bloomberg – Reuters AMER EY / AMER.CA 52-WEEKS LOW/HIGH EGP 0.25– EGP 0.61 AVERAGE DAILY TURNOVER EGP 9.2MN

Ownership Sol Global Holding Limited 35.0% Amer Wakf 11.0% Lantess international Limited 10.0% Egyptian Wakf Limited 2.0% Mohamed El-amin 7.0% Fineby Estates 4.0% Treasury 3.0% Free Floating 28.0%

Source: Bloomberg

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AMER.CA EGX 30 - rebased

2

PRIME INVESTMENT RESEARCH AMER GROUP - INITIATION OF COVERAGE

SEPTEMBER, 2016

SOURCE: PRIME

Valuation

We estimated Amer Group Enterprise Value at EGP 970.2mn, 72% of which comes from the company`s current real estate operations. The main reason we believe Amer group would not turn into applying a land owner model is that the current inflationary land prices leave very squeezed margins for co-development agreements, in time the recurring income operations only adds 28% of the group`s enterprise value. The company has a net cash exposure thanks to a foreign currency bank deposit, a position we assume to prevail over the valuation horizon.

Amer Group Portfolio Value in EGP mn Contribution to EV Contribution to Equity Value EV Per Share

Malls 36.08 4% 3.0% 0.01

Restaurants 82.31 8% 6.8% 0.02

Hotels 94.57 10% 7.8% 0.02

Real Estate - Inventory 165.75 17% 13.7% 0.04

Real Estate - Backlog Recognition

212.20 22% 17.5% 0.05

Real Estate – JV & Royalty 324.91 33% 26.8% 0.07

Vacation Club 54.40 6% 4.5% 0.01

Total Enterprise Value 970.21 100% 80.1% 0.21

Add - Cash 561.87

46.4% 0.12

Less Debt -304.74

-25.2% (0.07)

Less Minority Interest -16.14

-1.3% (0.00)

Equity Value 1,211.21

Value per Share 0.266

Upside Risks

1) Adding the planned retail GLA and new hotel keys from sister company`s (Porto Group) commercial

developments.

2) Expanding the restaurants chains as announced in the GCC.

3) Constructing more than 28k new units in current existing projects.

4) Faster than estimated successful restructuring plan implantation for the retail and hospitality sector.

5) We account for EGP 11.5/USD by year end, further EGP/USD higher official rate than the accounted for directly adds more FX-gains from the company`s FX denominated deposits.

Downside Risks

1) The current undiversified GLA and hotel keys in Al Ain Al Soukhna and North Coast, may adversely impact operations further than estimated due to the increasing competition.

2) Stagnant inventory sales, hence more sales duration adversely impact valuation.

3


SEPTEMBER, 2016

SOURCE: AMER, PRIME

Financial Statements … Historical & Forecast Income Statement Brief Hist. Forecast

In EGP Mn 2015 2016F 2017F 2018F

Revenues 1846.5 2080.4 2040.7 1566.7 Change 4.5% 12.7% -1.9% -23.2% COGS 1179.5 1214.4 1081.7 808.5

Change 6.1% 3.0% -10.9% -25.3% Gross Profit 667.0 866.0 958.9 758.2

SG&A 361.6 351.2 302.2 222.4 EBITDA 368.1 578.8 721.9 602.2

Net Income After MI 154.3 258.3 342.7 281.3

Balance Sheet Brief Hist. Forecast In EGP Mn 2015 2016F 2017F 2018F

Cash 553.3 356.2 779.6 871.0 Net Receivables 121.6 643.5 950.3 982.1 Work in Process 3060.6 3414.6 3500.3 3466.4

Other Current Assets 391.4 446.0 434.5 333.0

Total Current Assets 4126.9 4860.3 5664.7 5652.4

Net PPE 1052.2 1023.2 992.4 958.0

Other LT-Assets 1101.2 1194.1 1296.8 1410.4

Total Long Term Assets 2153.3 2217.3 2289.2 2368.3

Total Assets 6280.2 7077.6 7953.9 8020.7

Liabilities

STD - incl CPLTD 110.7 178.0 170.6 157.2 Accounts Payable 386.7 409.5 393.4 391.9

Advances 2561.2 1736.6 1612.6 992.4 Land Purchase Liability 218.4 166.8 115.2 63.6

Other Current Liabilities 719.5 1038.6 753.3 443.8

Total Current Liabilities 3996.4 3529.6 3045.1 2048.9

LTD 74.3 68.0 60.7 52.3 Land Liabiilities 177.9 133.4 88.9 44.5

Deposits - Units Owners 591.9 1562.1 2566.7 3334.9 Other Long Term liabilities 15.8 79.7 114.8 156.6

Total Long Term Liabilities 859.9 1843.1 2831.1 3588.3

Total Liabilities 4856.3 5372.7 5876.2 5637.1

Equity

Paid-in-Capital 911.9 911.9 911.9 911.9 Reserves 63.2 102.0 153.4 195.6

RE 434.4 654.0 945.3 1184.3 Minority interest 14.4 37.1 67.1 91.8

Total Equity 1423.9 1704.9 2077.7 2383.6

Margins & Ratios

2015 2016F 2017F 2018F

GPM 36.12% 41.63% 46.99% 48.39% Ebitda Margin 19.94% 27.82% 35.38% 38.44%

NPM 8.36% 12.42% 16.79% 17.95% EPS 0.034 0.057 0.075 0.062 P/E 8.27 4.94 3.73 4.54 DPS 0.011 0.013 0.018 0.015 ROA 2.67% 3.87% 4.56% 3.52% ROE 11.28% 16.51% 18.12% 12.61%

Debt/Equity 12.99% 14.43% 11.13% 8.79%

4


SEPTEMBER, 2016

The Spin-off Story

Back in November 2014, Egypt’s real estate firm Amer Group announced the extraordinary general meeting’s approval of splitting the company into two separate companies; Amer Holding (demerging company) and Porto Holding (demerged company).

The spin off rationale was mainly to make the two companies Amer Group and Porto Group lines of business and values more visible; in addition to, segregating the Porto concept. As the two company`s common management thought back then that it was a way of distinguishing the Porto concept more as it was getting mature.

The split entailed Amer Group as a property management and a land owner, while Porto Group would become a pure real estate developer. As per the split prospects, the plan was to shift all recurring income lines of business to Amer group, a matter we believe the common management is currently deviating from, in a way that is intensifying the conflicts of interest.

The two companies joined EGX database on 21 October, and commenced trading on 22 October 2015. The split took place based on the book value as per 9M2015 Financials, hence splitting assets and liabilities at the carrying value at the split date. Amer board decided the split to take place on a 2:1 ratio, cutting down Amer Group par value to EGP 0.2/share to create Porto Group`s EGP 0.1/share worth par value. The capital cut took Amer paid in capital to EGP 911.9mn down from EGP 1,367.9mn, and hence creating Porto Group`s current capital of EGP 455.9mn. Amer group commenced trading at EGP 0.58/share, while Porto group commenced at EGP 0.29/share.

Amer Group in Focus

Amer Group current business model is on its way towards becoming mainly a land owner besides taking over the responsibility of the recurring income LOB; malls, restaurants and hotels post the split currently going under heavy restructuring. We believe Amer Group has an implicit goal of supporting its performance over the upcoming 3 years from a group of real estate projects that are approaching full recognition as per our estimation. Amer group operates its 5 lines of business through a 19 almost fully owned subsidiaries, operating in tourism, real estate development, food and beverage, marketing, transport, contracting, services and trade.

The group first launched project was Porto Marina back in 2005, the project represents the spark for launching Amer Group more officially as Egypt`s secondary home market main competitor, in time most leading RE developers were focusing on winning more land areas in the capital. An aspect that gave Amer room to rapidly expand through Golf Porto Marina that was initiated in 2007, as the first middle income development in north coast with no private coast line. Still the development encouraged other smaller sized developers to acquire land areas in proximity, imitating Amer group`s success. Amer took his success story to the red sea in 2007, to initiate construction at Porto Soukhna, the landmark that took all Al Ain Al Soukhna developments` prices upward, as the development itself offered outings and dinning destinations the area was missing besides the spectacular design it enjoys. Amer group currently owns 7 RE projects in addition to developing Porto Sharm for 14% share of sales to the third party contributing the project`s land area.

Real Estate was not the group`s only focus, as it kept on enlarging its other lines of business further in correlation with developing more land areas. The group currently owns a chain of 48 restaurants dropping from 58 restaurants in 2015 as the company`s management decided to restructure the segment heavily to optimize its profitability. The segment is currently led by the famous Chilis franchise that was acquired back in the 90s, the highest in profitability and number of branches.

Amer group also operates 7 hotels with 811 keys, all present in secondary home destinations mainly in Al Ain Al Soukhna and North Coast, which led to weak operations in comparison to other hotel chains, as the management did not diversify its presence in the hospitality market yet. An aspect that continue to weigh down on profitability as tastes change and new touristic destinations grab more traffic from Al Ain Al Soukhna and North Coast. The group also provides a one of a kind usufruct vacation program “Porto Vacation Club”, comprising 1.65k units adding positively to the group’s profitability and performance.

The group also operates a retail division, incorporating 7 operational malls providing 62.3k sqm of gross leasing area, with 297k sqm reported as under construction and 140k sqm of malls under license, totaling 514k sqm of GLA.

5


SEPTEMBER, 2016

SOURCE: AMER GROUP

Business Lines

1) Real Estate … The company`s main Pillar up till 2019 Amer Group has access to 5.48mn Sqm of land over which 4.3mn Sqm of BUA is planned, undiversified in our view as all land areas lie in North Coast and Al Ain Al Soukhna. As the management chose to allocate the newly born projects and the primary housing ones to Porto Company post the split and retain those mature secondary home developments. Up till 1H2016, the group generated sales of EGP 10.5bn out of which EGP 8.5bn were recognized up till 1H2016. We set the full recognition of such to take place by 2019. The company currently has an inventory of 1,036 units remaining, anticipated to be sold in 2016 and 2017 with the exception of Porto Sharm, which we see ending its current inventory by 2018. We excluded Porto Heliopolis from Amer Group land and built up areas break down although Amer Group is the official land owner, as the project was officially added to Porto Group`s land area, in order to avoid misstatements. We account for Porto Heliopolis addition to Amer group`s revenues through the anticipated royalty fees and anticipated co-development agreement earnings from Porto Group. Over the horizon, we only valued the real estate segment through recognizing the remaining backlog, and valuing the current outstanding inventory without considering the company`s plans of adding more units. The most recent company`s presentation shows 22k more units to be added in Golf Porto Marina, 5K units in Golf Porto Soukhna, 1.6K in Porto Sharm and 210 units in Porto South Beach. A total of 28.81K units representing the 2.0mn Sqm of undeveloped land the company reports. It's worthy to mention that, Amer Group has sold 17.4k units since inception added to 1.03k units of inventory, aggregately 36.1% lower than the newly planned units. An aspect we do not see as aligning with Amer Group and Porto Group major split purpose; aiming to turn Amer Group to a land owner, property manager and recurring LOB operator. Allocating his newly acquired land bank to partners (mainly Porto Group) for a share of sales. We did not account for the planned new units in our valuation until the designing, planning and finally sales launch phases take place. In addition to beliefs that accounting for the planned units means a complete deviation from the split prospects.

Project Land Area - `000 Sqm

BUA - `000 Sqm

BUA Considered - `000 Sqm

Location Type Land

Ownership

Soukhna Pyramids 151.24 369.72 189.83 Red Sea Secondary Homes Amer Group

Golf Soukhna 2,174.97 1,204.00 458.46 Red Sea Secondary Homes Amer Group

South Beach 247.92 148.99 81.15 Red Sea Secondary Homes Amer Group

Porto Marina 68.00 179.43 116.81 North Coast Secondary Homes Amer Group

Golf Marina 1,835.01 1,816.66 524.71 North Coast Secondary Homes Amer Group

Marina Residence 18.00 71.05 52.15 North Coast Secondary Homes Amer Group

Porto Matrouh 338.99 203.39 70.58 Matrouh

Governorate Secondary Homes Amer Group

Porto Sharm 648.39 305.83 133.94 Sharm El Sheikh Secondary Homes 3rd party

Total 5,482.5 4,299.1 1,627.6

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SEPTEMBER, 2016

DOWNWARD RE STREAM AS DELIVERY TAKES PLACE … MARGINS DROP AS PORTO SHARM IS THE LAST IN RECOGNITION

SOURCE: AMER GROUP SOURCE: AMER GROUP

SOURCE: AMER GROUP

a) Recognizing the company`s backlog and Inventory … 39% of EV We split the company`s backlog recognition from its outstanding inventory in valuation, due to the untraceable and unspecified delivery policy, due to the characteristics of the group`s current projects being mostly apartment buildings. In addition to that the outstanding inventory of units are supposed to be ready for instant delivery, with no work in process to be registered, neither do we account for advances to be received. Besides an untraceable cancelation rate or volume, on the back of the group`s policy of withholding returns up till others show interest in such units. Segregating such backlog (2015) from the expected inventory depletion, empowers us to assume the disclosure available in the company`s statements concerning its receivables, WIP, and advances to be purely related to its current backlog. So that, we can liberalize the inventory from such burdens, and hence freely assume the cash installments to be received (3-years) and the related receivables. In other words, we segregated the inventory`s working capital comprised of receivables and installments (our assumption) from the backlog`s working capital carrying the whole lump sum of advances, receivables and WIP changes. Delivering EGP 3.83bn in 2016-2019 (versus EGP 4.1bn estimated by Amer Group over 2 years), adds EGP 342.1mn to the group`s valuation. Thanks to reasonable margins as most new sales or backlog amortization takes place at the advantage of an escalating selling prices in Egypt`s 2 main touristic destinations, while matching historical costs already incurred. Costs to sales turns upwards as Porto Sharm weight rises, squeezing margins due to the co-development agreement in which Amer Group incurs 14% of sales in return for the third party`s land. We estimats the new sales to take place at c. EGP 1.4bn added to 2015`s backlog delivery in 2016-2019; although proximate recognition seems promising the Group`s policy of grabbing more attention through more SG&A related spending comes at the cost of weak EBITDA.

Backlog & Inventory Valuation 2016 2017 2018 2019 2020 Revenues 1,410.19 1,138.54 660.10 620.23 0.00

EBITDA 324.29 237.96 126.07 124.05 0.00 Tax on EBITDA 72.97 53.54 28.37 27.91 0.00

Change in Working Capital 471.56 -397.05 -406.04 -347.11 496.18 Land Payment & Other CAPEX -13.63 -10.92 -6.13 -5.73 0.00

FCFF 709.26 -223.54 -314.47 -256.71 496.18 Discount Factor 1.05 1.28 1.55 1.88 2.29

DCF 675.57 -175.26 -202.94 -136.36 216.94 Implied Value 377.95

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SEPTEMBER, 2016

450.9K SQM OF LAND AREA & 463.7K SQM IF BUA … ASSIGNED TO PORTO GROUP ADDS 34% TO AMER`S EV

SOURCE: AMER GROUP SOURCE: AMER GROUP

SOURCE: PRIME SOURCE: PRIME

EGP 4.47BN OF SALES FROM THE 4 CO-DEVELOPED PROJECTS ADDS EGP 1.33BN OF REVENUE TO AMER GROUP IN 2016-2021

B) Co-development Agreements Along With Royalty Fees … 34% of EV

Porto Group currently has a backlog of 12 projects, from which 4 are co-developed with Amer Group, in return for 20% from each of Porto Matrouh, Golf Porto Soukhna, Porto Golf Marina contracted sales and 40% from the un-launched Porto Heliopolis. Porto was allocated a total land area of 450.9k Sqm over which 463.7k Sqm of BUA was planned.

The 4 projects are expected to yield sales of EGP 4.47bn during 2016-2021, with Porto Heliopolis the sole new launch anticipated in 4Q2016 as per our estimates (Porto Group`s Guidance - 2H2016). Hence, the anticipated Share of sales for Amer Group stands at EGP 1.33bn, thanks to the Porto Heliopolis 40% share agreement as we estimate the project`s aggregate residential and commercial sales at EGP 2.19bn

As per Amer Group, the JV – agreements with Porto Group will generate EGP 2bn. To be collected in 3-years as a maximum duration from Porto Group. We only account for EGP 1.33bn estimated over the horizon of such projects. We believe the 3 years duration stated by Amer Group, means premature payments to support a sister company and hence increase the impact of conflict of interest, in addition to that we see the EGP 2bn figure as exaggerated, giver the RE sector current slowdown.

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Golf Porto Sokhna

Golf Porto Marina

Porto Matrouh

Porto Heliopolis

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Golf Porto Sokhna

Golf Porto Marina

Porto Matrouh

Porto Heliopolis

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Porto Lagoons Porto Soukhna Islands Porto Matrouh Porto Heliopolis

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Porto Lagoons Porto Soukhna Islands Porto Matrouh Porto Heliopolis

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SEPTEMBER, 2016

EGP 12.3BN OF DOMESTIC SALES FROM PORTO GROUP, ADDS EGP 123.1MN TO AMER GROUP`S TOP LINE UP TILL 2023

SOURCE: PRIME

SOURCE: PRIME

While Royalty Fees (1% from all Porto Group`s projects in Egypt) cumulatively adds EGP 123.1mn in 2016-2023, thanks to Porto Heliopolis untapped sales yet, and Porto October huge remaining BUA. Royalty fees are due upon sales, with the only cash outflow anticipated represented in land payments amortizations.

The anticipate share from the 4-allocated land area to Porto Group along with the royalty revenues forecasted, together adds EGP 324.9mn to valuation representing 34% of EV, a valuable business model for Amer Group.

JV & Royalty Income Valuation 2016F 2017F 2018F 2019F 2020F 2021F 2020F 2023F FCFF 5.83 86.52 128.44 156.99 126.10 67.79 17.60 1.98

Discount Factor 1.05 1.28 1.55 1.88 2.29 2.78 3.38 4.10 DCF 5.56 67.84 82.89 83.39 55.13 24.40 5.21 0.48

Implied Value 324.90

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Porto Cairo commercial Porto October Porto Lagoons Porto Soukna Island Porto Matrouh Porto New Cairo Porto Pyramids Porto Heliopolis

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SEPTEMBER, 2016

SOURCE: PRIME

2) Malls Operations … Guidance indicates a restructuring plan is in place;

although the business model is getting distorted … 3.7% of EV Amer Group currently operates 7 malls with a total GLA of 62.3k Sqm, as the group shifted Porto Cairo Mall from being under Amer Group`s malls division to Porto Group`s properties. We do not fully understand the reason behind such shift. Although we see it as a probable conflict of interest through shifting any losses in case 2016 performance replicated 2015`s EGP 13mn net loss to Porto Group which has a rich backlog and promising sales up to 2023-2025 capable of absorbing such loss. The current 62.3k Sqm we stated previously, resulted from accounting 1H2016 operational GLA in addition to excluding meeting point mall indoor GLA beyond 1H2016 operations. As per the received guidance, such GLA of 7.9k Sqm will be sold as small office area, which we exclude from valuation due to lack of visibility on its worth. Although, we do not believe in such area sale material valuation`s addition, given New Cairo office areas over supply in relation to a relatively stagnant demand. As the main target pool might be represented by SMEs representation offices, seen more active following the macro status recovery over the medium term.

1) North Coast Properties …

Porto Marina is North Coast most recognized land mark, Amer Group`s first development. Unfortunately as is the case for all secondary home destinations, the property will never reach full utilization over a whole year. It only reaches full utilization in the 3

rd quarter, due to the summer

season taking place during which educational breaks usually coincide. We anticipate a slight upward shifts in utilization as the Holy month of Ramadan gradually comes earlier. Over the horizon, we believe Porto Marina is immune from competition as the development mainly depends on Marina residents and hotel guests. While a visit to Golf Porto Marina during August might implies that the status is not optimal in terms of tenants operations, in times other than the sponsored festivals by Amer Group held during summer. As competition is getting tougher due to other sophisticated developers newly established entertainment and retail areas, besides the planned GLA to be added from Emaar, Palm Hills and SODIC.

Porto Marina – in EGP mn 2015 2016F 2017F 2018F 2019F 2020F Indoor

Gross Leasable Area 12,917 12,917 12,917 12,917 12,917 12,917

Average Occupancy Rate 68% 67.8% 68.3% 68.8% 69.3% 69.8% Area Leased 8,760 8,760 8,824 8,889 8,953 9,018

Average Lease (Per sqm) 1,950 2,009 2,069 2,131 2,195 2,261

Revenue 17.08 17.59 18.26 18.94 19.65 20.39

Outdoor

Gross Leasable Area 4,466 4,466 4,466 4,466 4,466 4,466 Average Occupancy Rate 69% 69% 69% 69% 69% 69%

Area Leased 3,070 3,070 3,070 3,070 3,070 3,070 Average Lease (Per sqm) 2,096 2,159 2,223 2,290 2,359 2,429

Revenue 6.43 6.63 6.83 7.03 7.24 7.46

Total Revenue 23.52 24.22 25.08 25.97 26.89 27.84

Golf Marina – in EGP mn 2015 2016 2017 2018 2019 2020 Indoor


Average Occupancy Rate 56% 53% 50% 47% 44% 41% Area Leased 4,051 3,832 3,613 3,395 3,176 2,958

Average Lease (Per sqm) 379 391 402 414 427 440

Revenue 1.54 1.50 1.45 1.41 1.36 1.30

Outdoor


Area Leased 2,073 1,807 1,807 1,807 1,807 1,807 Average Lease (Per sqm) 870 896 923 951 979 1,009

Revenue 1.80 1.62 1.67 1.72 1.77 1.82

Total Revenue 3.34 3.12 3.12 3.12 3.12 3.12

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SEPTEMBER, 2016

SOURCE: PRIME

2) Al Ain Al Soukhna Properties Operational over the whole year, with the spot anticipated to witness more traffic over the upcoming years, as more RE developers other than Amer Group own RE - delivery, starts delivering their previously contracted sales including Telal – Rooya group, La Vista expansions, Azha, Ocean Blue and many others. Hence, grapping more attention to the area and more prospective clients as Amer malls are the only available dinning and outing locations in such area. Al Ain Al Soukhna proximity to the capital and Suez City also makes it a preferable destination for short stays as well. An aspect supporting our optimism concerning occupancy rates increasing. Amer Group recently signed management agreement with Accor-Hotels to manage its Hotels in Al Ain Al Soukna, will also add to the prospective clients and hence higher occupancy rates as traffic increases. In 1H2016, occupancy already inched up modestly as the group smoothed down leasing rates as an incentive that we account for over the whole year, added to the holy month of Ramadan effect.

Sky– in EGP mn 2015 2016F 2017F 2018F 2019F 2020F Indoor

Gross Leasable Area 3,571 684 684 684 684 684

Average Occupancy Rate 41% 50% 60% 70% 80% 80% Area Leased 1,479 345 413 482 550 550


Revenue 0.33 0.08 0.10 0.12 0.14 0.15

Outdoor

Gross Leasable Area 684 684 684 684 684 684 Average Occupancy Rate 26% 50% 60% 70% 80% 80%

Area Leased 178 345 413 482 550 550 Average Lease (Per sqm) 818 802 842 884 928 975

Revenue 0.15 0.28 0.35 0.43 0.51 0.54

Total Revenue 0.48 0.35 0.44 0.54 0.65 0.68

Mega– in EGP mn 2015 2016F 2017F 2018F 2019F 2020F Indoor


Average Occupancy Rate 60% 70% 80% 80% 80% 80% Area Leased 5,971 6,985 7,983 7,983 7,983 7,983

Average Lease (Per sqm) 1,064 1,042 1,074 1,127 1,184 1,243

Revenue 6.35 7.28 8.57 9.00 9.45 9.92

Outdoor



Revenue 5.04 4.94 5.56 5.83 6.13 6.43

Total Revenue 11.39 12.22 14.13 14.83 15.58 16.35

Water Front– in EGP mn 2015 2016F 2017F 2018F 2019F 2020F

Indoor



Revenue 1.58 1.55 1.73 1.82 1.91 2.01

Outdoor


Area Leased 1,594 1,965 2,211 2,457 2,702 2,948


Revenue 0.33 0.39 0.47 0.54 0.63 0.72

Total Revenue 1.90 1.94 2.20 2.36 2.54 2.73

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SEPTEMBER, 2016

SOURCE: PRIME

SOURCE: PRIME

3) Meeting Point … Facing the toughest competition as 3 new malls launched operations since 2015 in the same area, featuring new and highly recognized retail and F&B brands, added to cinemas and other entertainment dedicated GLA. Adversely impacting the meeting point position in the New Cairo`s race, as currently over 6 operational malls exist in such area. As a result, we believe occupancy rates for the outdoor area will keep on declining, until stabilizing at c .55% going forward. As New Cairo`s retail market stabilizes and more residents move in to East Cairo, encouraging tenants to maintain their operating areas. We did not estimate any occupancy or operations beyond 1H2016 performance reported from the indoor area, as it was noted that the area will be allocated as small office areas, that we opted to exclude from valuation due to lack of visibility from our side.

Meeting Point– in EGP mn 2015 2016F 2017F 2018F 2019F 2020F Indoor


Average Occupancy Rate 46% 17% 0% 0% 0% 0% leased Area 3,604 1,303 - - - -

Average Lease (Per sqm) 2,130 2,754 - - - -

Revenue 7.68 3.59 - - - -

Outdoor


Area Leased 1,517 1,255 1,200 1,145 1,090 1,035 Average Lease (Per sqm) 592 563 579 597 615 633

Revenue 0.90 0.71 0.70 0.68 0.67 0.66

Total Revenue - Meeting Point 8.57 4.29 0.70 0.68 0.67 0.66

4) Porto Matrouh A New market promising high potential as comparable competitors did not join Marsa Matrouh`s market yet, giving an advantage to Amer Group property there. In 2016, we follow 1H2016 performance dynamics and going forward we believe occupancy rates will take on rising as the pricing level is reasonable for a penetrator. Delivering Porto Group and Amer Group RE residential properties also adds to the upside potential for Porto Matrouh Mall.

Porto Matrouh– in EGP mn 2015 2016 2017 2018 2019 2020

Indoor


Area Leased 455 466 932 1,554 2,486 2,486


Revenue 0.13 0.41 0.85 1.45 2.39 2.46

Outdoor


Area Leased 405 110 659 1,098 1,756 1,756 Average Lease (Per sqm) 44 53 55 56 58 60

Revenue 0.02 0.01 0.04 0.06 0.10 0.10

Total Revenue - Porto Matrouh 0.15 0.42 0.88 1.51 2.49 2.57

12


SEPTEMBER, 2016

SOURCE: PRIME

SOURCE: PRIME

Malls Valuation We followed the company`s guidance in restructuring such segment, which means that we expect to see a smoothing SG&A expenses which exceed 3x of top line in some properties and 2015 and above 1-1.5x in 1H2016.

Revenue - Malls– in EGP mn 2015 2016 2017 2018 2019 2020

Porto Marina 23.52 24.22 25.08 25.97 26.89 27.84 Golf Porto Marina 3.34 3.12 3.12 3.12 3.12 3.12

Meeting Point 8.57 4.29 0.70 0.68 0.67 0.66 Sky 0.48 0.35 0.44 0.54 0.65 0.68

Mega 11.39 12.22 14.13 14.83 15.58 16.35 Water Front 1.90 1.94 2.20 2.36 2.54 2.73

Porto Matrouh 0.15 0.42 0.88 1.51 2.49 2.57

Aggregate Revenues 49.35 46.56 46.55 49.03 51.95 53.96

COGS - Malls 2015 2016 2017 2018 2019 2020

Porto Marina -1.49 -2.50 -3.07 -3.68 -4.33 -4.47

Golf Porto Marina -1.42 -1.57 -1.59 -1.60 -1.61 -1.61

Meeting Point -1.57 -1.11 -0.42 -0.42 -0.42 -0.43 Sky -0.63 -0.58 -0.57 -0.45 -0.42 -0.33

Mega -1.20 -1.97 -2.91 -3.76 -4.70 -4.92 Water Front -1.04 -1.34 -1.32 -1.41 -1.50 -1.60

Porto Matrouh -0.15 -0.36 -0.54 -0.82 -1.25 -0.93

Aggregate COGS -7.50 -9.43 -10.41 -12.13 -14.22 -14.30

SG&A - Malls 2015 2016 2017 2018 2019 2020 Porto Marina -8.69 -9.18 -9.63 -10.10 -10.59 -10.97

Golf Porto Marina -10.35 -1.53 -1.23 -0.92 -0.92 -0.92 Meeting Point -6.79 -0.81 -0.13 -0.13 -0.13 -0.12

Sky -1.15 -0.49 -0.40 -0.33 -0.29 -0.21 Mega -3.06 -3.19 -3.68 -3.87 -4.06 -4.26

Water Front -1.21 -0.76 -0.72 -0.77 -0.83 -0.89

Porto Matrouh -0.20 -0.07 -0.14 -0.24 -0.40 -0.51

Aggregate SG&A -31.45 -16.03 -15.94 -16.36 -17.23 -17.89

EBITDA - Malls 2015 2016 2017 2018 2019 2020 Porto Marina 4.81 4.24 5.50 5.05 5.11 5.28

Golf Porto Marina -10.10 -0.15 0.15 0.46 0.46 0.46 Meeting Point -2.37 1.58 0.29 0.28 0.28 0.27

Sky -1.58 -0.71 -0.51 -0.24 -0.07 0.14 Mega 1.99 3.26 3.08 3.24 2.64 2.78

Water Front -0.89 -0.29 0.09 0.09 0.10 0.11 Porto Matrouh -0.23 0.09 0.24 0.40 0.67 0.86

Aggregate EBITDA -8.38 8.02 8.83 9.29 9.19 9.89

The heavy SG&A structure mainly stemmed from marketing campaigns, employees number and festivals taking place at the properties heavily weigh down on valuation as the aggregate value for the segment is mainly driven from 3 properties.We valued the segment at EGP 36.1mn, as we do not account for the anticipated new GLA under construction or licensing over our forecast horizon up till actual additions take place.

Malls Valuation– in EGP mn

2016 2017 2018 2019 2020 Value Per Project Porto Marina

2.42 2.74 2.02 1.68 19.41 28.26

Golf Porto Marina

-0.86 -0.48 -0.21 -0.18 -2.10 -3.84 Meeting Point

1.24 0.17 -0.13 -0.11 -1.33 -0.15

Sky

-0.86 -0.57 -0.30 -0.15 -0.51 -2.40 Mega

1.80 1.32 1.25 0.78 8.97 14.11

Water Front

-0.57 -0.21 -0.15 -0.12 -1.37 -2.41 Porto Matrouh

-0.18 -0.07 0.02 0.10 2.64 2.51

Malls NPV

36.08

13


SEPTEMBER, 2016

3) Restaurants … A successful restructure, led to higher Employees/Seat … 8.5% of EV In 2015, the company operated 58 branches currently standing at 48, as shutdowns for the operationally weak took place. The company almost added no new branches to any brand other than the most profitable Chilis. Over the horizon we believe utilization rates to fall as competition over such revenue stream is getting fierce in Egypt, especially post the deterioration in industrial activity over the past 5-years. On Average we anticipate annual escalation of 3-8% beyond 2016 that witnessed some discounts as is the case for Studio Misr, necessary for incentives as number of covers drop.

Chilis– in EGP mn 2015 2016 2017 2018 2019 2020 No of Restaurants 16 18 18 18 18 18

Total Number of Seats 3414 3564 3564 3564 3564 3564 Occupancy Rate 77% 72% 70% 68% 66% 64%

Average Revenue per cover 117 129 135 142 149 157

Revenue 112.31 120.59 123.09 125.55 127.94 130.26

Studio Misr– in EGP mn 2015 2016 2017 2018 2019 2020 No of Restaurants 11 10 10 10 10 10 Total no. of Seats 1718 1718 1718 1718 1718 1718

Occupancy Rate 55% 53% 51% 49% 47% 45% Average Revenue per cover 187 150 157 165 174 182

Revenue 64.94 50.07 50.60 51.06 51.44 51.72

Carinos– in EGP mn 2015 2016 2017 2018 2019 2020 No of Restaurants 6 4 4 4 4 4



Revenue 15.80 11.23 11.16 11.00 10.75 10.39

Studio & Seafood– in EGP mn 2015 2016 2017 2018 2019 2020 No of Restaurants 4 1 1 1 1 1 Total no. of Seats 319 355 355 355 355 355 Occupancy Rate 35% 30% 30% 30% 30% 30%


Revenue 9.23 8.98 9.21 9.44 9.67 9.92

Halaka– in EGP mn 2015 2016 2017 2018 2019 2020 No of Restaurants 3 3 3 3 3 3 Total No. of Seats 468 469 470 471 472 473


Revenue 18.56 16.20 15.89 15.53 15.14 14.71

Freshi– in EGP mn 2015 2016 2017 2018 2019 2020 No of Restaurants 11 7 7 7 7 7 Total No. of Seats 114 114 114 114 114 114


Revenue 3.12 2.18 2.80 3.52 3.88 4.26

Ocean Basket– in EGP mn 2015 2016 2017 2018 2019 2020 No of Restaurants 2 3 3 3 3 3 Total no. of Seats 228 228 228 228 228 228


Revenue 1.65 3.01 3.69 4.43 4.65 4.88

14


SEPTEMBER, 2016

SOURCE: PRIME

SOURCE: PRIME

Other– in EGP mn 2015 2016 2017 2018 2019 2020

No of Restaurants 3 2 2 2 2 2


Average Revenue per cover 150.872 158 166 175 183 193

Revenue 0.49 0.73 1.00 1.28 1.60 1.68

Restaurants Valuation Over the horizon we anticipate the EBITDA margin to reach 9.1% by 2020 up from 8.5% in 2015, as the company continues on better utilizing its available employees, and cut on overheads. We do not account for any GCC expansion or local chains additions in our forecast, as we choose to remain conservative until the company officially launches operations for such additions.

Revenues- Restaurants– in EGP mn 2015 2016 2017 2018 2019 2020 Chilis 112.3 120.6 123.1 125.5 127.9 130.3

Studio Misr 64.9 50.1 50.6 51.1 51.4 51.7 Carinos 15.8 11.2 11.2 11.0 10.8 10.4

Studio & Seafood 9.2 9.0 9.2 9.4 9.7 9.9 Halaka 18.6 16.2 15.9 15.5 15.1 14.7

Freshi 3.1 2.2 2.8 3.5 3.9 4.3

Ocean Basket 1.7 3.0 3.7 4.4 4.7 4.9 Other 0.5 0.7 1.0 1.3 1.6 1.7

Total 226.1 213.0 217.4 221.8 225.1 227.8

COGS - Restaurants 2015 2016 2017 2018 2019 2020 Chilis -101.6 -107.6 -109.8 -112.0 -114.1 -116.1

Studio Misr -53.5 -41.1 -41.6 -42.0 -42.3 -42.5 Carinos -15.1 -11.0 -10.7 -10.4 -10.0 -9.6

Studio & Seafood -9.1 -9.2 -9.3 -9.4 -9.5 -9.6 Halaka -13.9 -12.1 -11.8 -11.4 -11.1 -10.7 Freshi -2.9 -2.0 -2.5 -3.1 -3.4 -3.7

Ocean Basket -1.7 -4.0 -4.1 -4.2 -4.1 -4.0 Other -0.6 -0.7 -1.0 -1.3 -1.6 -1.6

Total -198.3 -187.8 -190.9 -193.8 -196.1 -197.9

SG&A - Restaurants 2015 2016 2017 2018 2019 2020 Chilis -8.1 -8.7 -8.9 -9.1 -9.2 -9.4

Studio Misr -4.9 -3.8 -3.8 -3.9 -3.9 -3.9 Carinos -1.7 -1.2 -1.2 -1.1 -1.0 -0.9

Studio & Seafood -0.5 -0.7 -0.7 -0.7 -0.6 -0.6 Halaka -1.2 -1.1 -1.1 -1.0 -1.0 -1.0 Freshi -0.1 -0.1 -0.1 -0.1 -0.1 -0.2

Ocean Basket -0.6 -0.8 -0.8 -0.7 -0.6 -0.5 Other -0.0 -0.0 -0.0 -0.0 -0.0 -0.0

Total -17.3 -16.4 -16.6 -16.6 -16.6 -16.5

EBITDA - Restaurants 2015 2016 2017 2018 2019 2020 Chilis 8.0 8.6 8.8 9.0 9.2 9.3

Studio Misr 8.2 6.3 6.4 6.4 6.5 6.5

Carinos -0.5 -0.6 -0.3 -0.1 0.2 0.4

Studio & Seafood -0.1 -0.7 -0.5 -0.3 -0.1 0.1 Halaka 3.8 3.4 3.4 3.4 3.4 3.4 Freshi 0.3 0.2 0.3 0.4 0.4 0.5

Ocean Basket -0.6 -1.7 -1.1 -0.4 0.0 0.4 Other -0.1 0.0 0.1 0.1 0.1 0.1

Total 19.1 15.7 17.1 18.5 19.6 20.7

15


SEPTEMBER, 2016

SOURCE: PRIME

3 brands weigh down on the segment`s valuation, as a matter of a lower operational efficiency although added to the forecast inability to sustain the sky rocketing competition. Chilis franchise the first featured brand in Amer Group`s portfolio, leads the segment`s valuation and contributes c. 45% of its NPV.

DCF – in EGP mn 2016 2017 2018 2019 2020 NPV Chilis 1.05 1.28 1.55 1.88 31.02 36.78

Studio Misr 3.15 3.02 2.51 2.07 23.55 34.29 Carinos -1.47 -0.86 -0.57 -0.36 -3.06 -6.33

Studio & Seafood -0.83 -0.59 -0.37 -0.21 -1.22 -3.23 Halaka 2.16 1.81 1.49 1.22 13.65 20.33 Freshi 0.06 0.14 0.16 0.15 2.03 2.55

Ocean Basket -1.64 -1.02 -0.39 -0.10 0.87 -2.28

Other -0.02 -0.00 0.01 0.02 0.19 0.19

Total

82.31

16


SEPTEMBER, 2016

4) Hospitality Segment … 7 Hotels in touristic destinations suffering from seasonality … 9.7% of EV As of 1H2016, the group operated 811 rooms, anticipated to reach 971 rooms by the end of 2016 as the company currently shutdown over 50% of the available keys off-season, in order, to become more capable of managing its operational expenses. The company operates 2 hotels in North Coast, usually fully occupied during the third quarter, 4 hotels in Al Ain Al Soukhna with the highest occupancy registered during Easter. In addition to its most recent venture in Marsa Matrouh. The segment suffers from the increasing competition from new ventures about to get launched in North Coast (Emaar – Marassi), massively increasing the available number of room nights in north Coast. While, in Al Ain Al Soukhna competition remains minimal on the Zaafrana Side of Soukhna, as hospitality supply there is limited. Over the upcoming medium term we see higher occupancy rates from 2016 trough to 2020, as we account for Accor-Hotels taking the responsibility of managing the Red Sea chain. Going Forward, we believe other revenues including services and F&B to stand at 40% in Porto Marina, 70% in Soukhna Hotel, 50% at El Jabal, 72% at Cancun 1.5 folds at South beach and 50% at Matrouh of room revenues.

Porto Marina – in EGP mn 2015 2016 2017 2018 2019 2020 No of Keys 330 330 330 330 330 330

No Of Room Nights 78,410 78,410 78,410 78,410 78,410 78,410 Average Occupancy Rate 56% 56% 57% 58% 58% 58%

No of Room Nights Occupied 44,246 44,246 45,030 45,814 45,814 45,814 Average Room Rate 831 873 916 962 1,010 1,061

Room Revenue 37 39 41 44 46 49

Other Revenue 16 15 17 18 19 19

Total Revenue 52.9 52.7 56.3 60.2 63.2 66.3

Golf Marina – in EGP mn

2015 2016 2017 2018 2019 2020

No of Keys

67 67 67 67 67 67 No Of Room Nights

10,251 10,251 10,251 10,251 10,251 10,251

Average Occupancy Rate

51% 48% 45% 42% 39% 39% No of Room Nights Occuped

5,240 4,932 4,625 4,317 4,010 4,010

Average Room Rate

774 812 853 895 940 987 Escalation Rate

5% 5% 5% 5% 5%

Room Revenue

4.05 4.01 3.94 3.87 3.77 3.96

Soukhna – in EGP mn

2015 2016 2017 2018 2019 2020 No of Keys

145 179 179 179 179 179

No Of Room Nights

52,925 65,335 65,335 65,335 65,335 65,335 Average Occupancy Rate

67% 55% 57% 59% 61% 61%

No of Room Nights Occupied

35,493 35,934 37,241 38,548 39,854 39,854 Average Room Rate

699 748 785 824 865 909

Room Revenue

24.8 26.9 29.2 31.8 34.5 36.2

Other Revenue

18.9 19 20 22 24 25

Total Revenue

43.74 45.67 49.70 54.01 58.63 61.57

El-Jabal – in EGP mn 2015 2016 2017 2018 2019 2020 No of Keys 32 32 32 32 32 32


No of Room Nights Occuped 1,389 1,908 2,017 2,126 2,235 2,344 Average Room Rate 559 570 587 617 648 680

Room Revenue 0.777 1.088 1.185 1.311 1.447 1.594

Other Revenue 0.252 0.544 0.592 0.656 0.724 0.797

Total Revenue 1.028 1.63 1.78 1.97 2.17 2.39

17


SEPTEMBER, 2016

SOURCE: PRIME

Cancun – in EGP mn 2015 2016 2017 2018 2019 2020 No of Keys 114 117 117 117 117 117


No of Room Nights Occupied 25,006 24,440 25,294 26,149 26,149 26,149 Average Room Rate 541 579 608 638 670 703

Room Revenue 13.53 14.15 15.37 16.69 17.52 18.40

Other Revenue 10.06 9.96 11.13 12.41 13.04 13.69

Total Revenue 23.6 24.1 26.5 29.1 30.6 32.1

South Beach – in EGP mn 2015 2016 2017 2018 2019 2020 No of Keys 80 152 152 152 152 152


No of Room Nights Occupied 10,547 12,027 12,027 14,032 14,032 14,032

Average Room Rate 416 354 364 375 387 398

Room Revenue 4.39 4.26 4.38 5.27 5.43 5.59

Other Revenue 7.53 7.66 7.67 8.96 8.95 9.22

Total Revenue 11.9 11.9 12.1 14.2 14.4 14.8

Matrouh – in EGP mn 2015 2016 2017 2018 2019 2020 No of Keys 91 95 95 95 95 95


No of Room Nights Occupied 7,429 7,756 8,008 8,261 8,261 8,261 Average Room Rate 587 604 622 641 660 680

Room Revenue 4.36 4.69 4.98 5.30 5.45 5.62

Other Revenue 2.07 2.34 2.49 2.65 2.73 2.81

Total Revenue 6.43 7.03 7.48 7.94 8.18 8.43

18


SEPTEMBER, 2016

SOURCE: PRIME

Hospitality Valuation Over Our forecast we smooth down the Cost of Sales to Revenues to 49% by 2020 down from 52% in 2015, as well as the SG&A to 42% down from 46%; directly adding to the segment`s EBITDA margin. As we assume the new Hotels-management company to start implementing higher efficiency measures through downsizing or better employees utilization. Such anticipated dynamics to led to the segment`s adding EGP 94.6mn to valuation although earnings are not anticipated to show major year on year jumps.

Revenue – Hotels – in EGP mn 2015 2016 2017 2018 2019 2020 Porto Marina 52.94 52.71 56.33 60.17 63.18 66.34 Golf Marina 4.05 4.01 3.94 3.87 3.77 3.96

Soukhna 43.74 45.67 49.70 54.01 58.63 61.57 El-Jabal 1.03 1.63 1.78 1.97 2.17 2.39 Cancun 23.59 24.10 26.50 29.10 30.56 32.08

South Beach 11.92 11.92 12.06 14.22 14.38 14.81 Matrouh 6.43 7.03 7.48 7.94 8.18 8.43

Porto World 5.78 5.92 6.35 6.89 7.28 7.63

Total 149.48 152.99 164.12 178.18 188.15 197.20

COGS - Hotels 2015 2016 2017 2018 2019 2020 Porto Marina -30.26 -28.41 -30.10 -31.88 -33.30 -34.79 Golf Marina -1.81 -2.98 -2.97 -2.95 -2.92 -3.04

Soukhna -24.61 -23.72 -25.43 -27.27 -29.22 -30.51 El-Jabal -0.87 -1.12 -1.10 -1.17 -1.26 -1.34 Cancun -9.38 -10.15 -11.02 -11.96 -12.51 -13.08

South Beach -7.34 -7.70 -8.05 -9.00 -9.11 -9.36 Matrouh -2.75 -3.15 -3.43 -3.75 -4.01 -4.28

Porto World - - - - - -

Total -77.02 -77.23 -82.10 -87.98 -92.33 -96.40

SG&A - Hotels 2015 2016 2017 2018 2019 2020 Porto Marina -23.85 -26.36 -25.35 -24.07 -25.27 -26.54 Golf Marina -0.32 -0.40 -0.39 -0.39 -0.38 -0.40

Soukhna -18.08 -20.55 -22.36 -24.30 -26.39 -27.70 El-Jabal -0.21 -0.09 -0.18 -0.20 -0.22 -0.24 Cancun -10.57 -10.12 -11.40 -12.51 -13.14 -13.80

South Beach -6.95 -5.99 -5.46 -5.73 -5.07 -4.49 Matrouh -2.96 -3.02 -2.99 -3.02 -2.95 -2.87

Porto World -5.46 -5.62 -6.03 -6.55 -6.91 -7.25

Total -68.41 -72.16 -74.16 -76.77 -80.32 -83.27

EBITDA - Hotels 2015 2016 2017 2018 2019 2020 Porto Marina 6.10 3.47 6.52 9.98 10.48 11.00 Golf Marina 1.92 1.60 1.58 1.55 1.51 1.58

Soukhna 8.24 6.93 7.54 8.19 8.89 9.34 El-Jabal -0.06 0.89 0.98 1.08 1.19 1.31 Cancun 0.36 2.20 2.15 2.36 2.48 2.61

South Beach -2.36 0.44 0.81 1.81 2.55 3.36 Matrouh 0.72 2.25 2.47 2.62 2.70 2.78

Porto World 0.32 0.30 0.32 0.34 0.36 0.38

Total 15.24 18.08 22.36 27.94 30.17 32.37

DCF – in EGP mn 2016 2017 2018 2019 2020 NPV Porto Marina -0.45 1.85 3.08 2.73 32.93 40.14 Golf Marina 0.41 0.30 0.22 0.16 1.98 3.07

Soukhna 2.47 2.30 2.17 2.04 25.21 34.19 El-Jabal 0.24 0.27 0.27 0.26 3.50 4.56 Cancun 0.19 0.08 0.15 0.18 2.41 3.01

South Beach -1.91 -1.26 -0.48 -0.01 3.42 -0.23 Matrouh 0.48 0.55 0.52 0.45 5.33 7.32

Porto World 0.22 0.19 0.17 0.15 1.78 2.51

Total

94.57

19


SEPTEMBER, 2016

5) Porto Vacation Club … As per the company, EGP 1bn of memberships sold to date, equivalent

to 18.9K members distributed over 1.65k units. We valued the venture at EGP 54.4mn due to the positive working capital addition to FCFF, and relatively high operating margin.

20


SEPTEMBER, 2016

Stock Recommendation Guidelines

Recommendation Target-to-Market Price (x)

Buy x > 15%

Accumulate 5%< x <15%

Hold -5% < x < 5%

Reduce -15% < x < -5%

Sell x < -15%

Strong Buy x > 40%

Investment Grade Explanation

Growth 3 Yr. Earnings CAGR > 20%

Value Equity Positioned Within Maturity Stage of Cycle

Speculative Quality Earnings Reflect Above Normal Risk Factor

21


SEPTEMBER, 2016

PRIME SECURITIES

Hassan Samir Managing Director +202 3300 5611 [email protected]

RESEARCH TEAM

Aboubakr Emam, CFA Manager +202 3300 5724 [email protected]

Eman Negm, MSc Economist +202 3300 5716 [email protected]

Mohamed Marei Equity Analyst +202 3300 5725 [email protected]

Ali Afifi Equity Analyst +202 3300 5723 [email protected]

Omneya El Hammamy Equity Analyst +202 3300 5718 [email protected]

Ingy Fahmy Equity Analyst +202 3300 5722 [email protected]

Taher Seif Equity Analyst +202 3300 5719 [email protected]

Mohamed Magdi Junior Equity Analyst +202 3300 5720 [email protected]

SALES TEAM

Mohamed Ezzat Head of Sales & Branches +202 3300 5784 [email protected]

Shawkat Raslan Heliopolis Branch Manager +202 3300 5110 [email protected]

Amr Saber Team Head – Institutions Desk +202 3300 5659 [email protected]

Amr Alaa, CFTe Manager +202 3300 5609 [email protected]

Mohamed Elmetwaly Manager +202 3300 5610 [email protected] Emad Elsafoury Manager +202 3300 5624 [email protected]

HEAD OFFICE

PRIME SECURITIES S.A.E.

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Documents

Amer Group - Initiation of Coverage - September 2016