SODIC Buy 12 November 2015

Market Price Assumes Bear Operating

Conditions; Unjustifiable in our View

Fair Value & Estimates Change Real Estate & Hospitality | Egypt Mai Attia
+20 2 35356434
Set our new FV on 0.8x 2016e NAV, in line with five-year average maiattia@efg-hermes.com
discount to NAV
Our new fair value for SODIC of EGP14.5/share offers 86% upside, and thus
we maintain our Buy rating. Despite 30% cut in our fair value, we highlight
that we have lowered our NAV by 12% only, albeit assigning a 20% discount
to 2016e NAV to arrive at our new fair value. The assigned discount is in line
with the stocks five-year average discount to its forward NAVs. We opt to
apply the average cycle discount rather than assume that the full value
would be realised to account for what we think are currently more stable
market conditions rather than expectations for further exponential growth
in the sector activity, with selling prices growing at annual double digit rates
and contracted sales exponentially increasing annually. SODIC continues to
lead local peers, in terms of the pace of land bank monetisation, in our view,
and thus we believe it should be assigned the lowest discount to NAV Stock Data
amongst our coverage universe. Rating Buy
Price (11 Nov 2015) EGP7.79
Stock price assumes no new project launches; unjustifiable in our view Fair Value EGP14.50
The stock has underperformed the general market index YTD, in line with Last Div. / Ex. Date EGP4.00 on 10 May 2011
Mkt. Cap / Shares (mn) EGP2,640 / 338.9
the real estate stocks. Despite no major operational changes, in our view, the
Av. Monthly Liquidity (mn) EGP277.3
stock is currently trading at a steep 57% discount to 2016e NAV, which we 52-Week High / Low EGP16.3 / EGP7.8
believe is unjustifiable. Should we assume the net present value of the Bloomberg / Reuters OCDI EY / OCDI.CA
accounts receivables (as of 2014) discounted at 13% and assuming 35% Est. Free Float 46.0%

developer margin and the value of SODICs commercial land; this would yield
EGP10.2/share, offering c30% upside. Thus, the market price is assuming that Share Price Performance Relative
To EFGI (VWAP)
the company would not launch any new projects on its existing land bank,
which we believe is largely unjustifiable and a fairly unrealistic scenario,
Price (EGP)
especially given the companys strong brand name in the market.
EFGI (VWAP)
Sales remain strong, however assume slower sales pace versus our 18
previous estimates 16
14
We expect SODIC to exceed its sales target for the year of EGP4.0 billion. We
12
estimate contracted sales of EGP4.1 billion in 2015e and 2016e and EGP3.1 10
billion in 2017e. Slower sales pace is primarily driven by less inventory rather 8
than slower market activity. SODIC has also recently announced the 6
11 Nov 14

11 May 15

11 Nov 15
11 Aug 15
11 Feb 15

acquisition of 126,000 sqm of land in 6th of October city. We still await the
announcement of further details regarding the projects development plan.
Key Financial Highlights
CONTENTS
Dec Year End (EGP mn) 2014a 2015e 2016e 2017e I. SET OUR NEW FV ON 0.8X 2016E 3
Revenue 1,366 1,303 1,799 2,255 NAV; REITERATE OUR BUY RATING
EBITDA 246.8 306.0 478.7 670.5 II. PROJECT HIGHLIGHTS AND 8
Net Attributable Income 142.4 214.8 309.9 463.7 ASSUMPTIONS

EPS (EGP) 0.42 0.63 0.91 1.37 III. FINANCIAL STATEMENTS 9

Price to Earnings (x) 18.5 12.3 8.5 5.7
Dividend Yield (%) 0.0 0.0 0.0 0.0
Net Debt (Cash) (905.6) (15.5) 592.1 405.4
ROAE (%) 5.8 6.7 9.0 12.1
Source: SODIC, EFG Hermes estimates
1 / 14 pages Please refer to the disclaimer and disclosures at the end of this note.
 SODIC 12 November 2015

Real Estate & Hospitality | Egypt

DataMiner Investment Thesis

SODIC is a leading property developer in
(Dec Year End) In EGP million, unless otherwise stated 2014a 2015e 2016e 2017e Egypt, with a current land bank of 7.9
million sqm. The company targets the high
Income Statement
end and upper middle-income bracket
Revenue 1,366 1,303 1,799 2,255 through offering various products. Before its
EBITDA 246.8 306.0 478.7 670.5 recent land acquisitions, SODICs growth
EBIT 230.5 280.3 448.6 636.3 potential and future outlook has been
Taxes and Zakat (46.0) (67.8) (96.3) (142.3) somewhat hindered by its limited
undeveloped land bank. However, the
Minority Interest 11.9 12.1 12.4 12.6 SODICs acquisition of 1.8 million sqm
Reported Net Income 142.4 214.8 309.9 463.7 scattered over three land plots in Egypt
Attributable Net Income 142.4 214.8 309.9 463.7 during the past 18 months has increased the
Balance Sheet companys land bank by c30%. The largest
acquired plot was in the East of Cairo back
Cash and Cash Equivalents 2,105 1,841 1,700 1,554 in May 2014, which was perceived
Total Current Assets 10,232 10,917 11,816 12,506 expensive at the time of acquisition, but is
Total Non-Current Assets 3,473 4,765 5,925 6,230 value-accretive on our numbers. Moreover,
Total Assets 13,705 15,681 17,741 18,736 SODIC managed to penetrate the lucrative
secondary home market, acquiring 0.44
Total Current Liabilities 7,731 9,435 11,679 12,876
million sqm in the North Coast, and
Total Non-Current Liabilities 2,885 2,943 2,449 1,783 launching the project in August 2015. The
Total Liabilities 10,616 12,378 14,128 14,659 company has recently announced the
Minority Interest 94.4 94.4 94.4 94.4 acquisition of a relatively small land plot,
126,000 sqm, in the West of Cairo through
Total Equity 3,088 3,303 3,613 4,077
a government auction. We believe SODIC
Total Net Debt (905.6) (15.5) 592.1 405.4 would continue to actively bid in new
Cash Flow Statement auctions to further expand its land bank. In
Cash Operating Profit after Taxes 259.7 240.9 340.4 498.3 addition, the company is considering further
expanding its investment properties
CAPEX and Investments (11.4) (10.9) (16.8) (23.3)
portfolio.
Free Cash Flow (490.9) (777.3) (404.1) 277.3
Net Financing 1,863 626.6 466.6 (333.4) Valuation and Risks
Change in Cash 1,372 (150.7) 62.5 (56.1) We set our fair value of EGP14.5 per share
Per Share Financial Summary based on 0.80x 2016e NAV, assigning 20%
Normal Reported EPS (EGP) 0.4 0.6 0.9 1.4 discount to NAV, in line with the past five-
year average discount to its forward NAV.
Reported Dividend Per Share (EGP) 0.00 0.00 0.00 0.00
The assigned discount is the lowest in our
Book Value Per Share (EGP) 9.11 9.75 10.66 12.03 peer group, which is supported by our
Valuation Metrics relatively strong visibility of future cash flow
Price to Earnings (x) 18.5 12.3 8.5 5.7 and earnings for the company's projects,
Price to Book Value (x) 0.9 0.8 0.8 0.7 which we believe investors will appreciate,
especially in the current operating
Price to Cash Flow (5.51) (3.44) (6.82) 8.78 environment. Our valuation is driven by the
FCF Yield (%) (18.59) (29.44) (15.31) 10.50 company's operating environment, where
Dividend Yield (%) 0.0 0.0 0.0 0.0 sales pace and selling prices are the major
EV / EBITDA (x) 7.4 6.0 3.8 2.7 factors that determine the value of the
company's development properties. As for
EV / Invested Capital (x) 0.8 0.6 0.4 0.4 the investment properties, occupancy rates
ROAIC (%) 9.3 7.8 9.4 11.4 and the currently attractive rental yields,
ROAE (%) 5.8 6.7 9.0 12.1 especially for retail space, are our major
KPIs value drivers. Downside risks to our
valuation include a deteriorating operating
Revenue Growth (%) 3.1 (4.6) 38.1 25.4
environment, along with higher-than-
EBITDA Growth (%) 305.3 24.0 56.4 40.1 expected construction costs. The company's
Gross Profit Margin (%) 34.8 39.7 39.5 41.1 sensitivity to its operating dynamics have
EBITDA Margin (%) 18.1 23.5 26.6 29.7 been further inflated, following the
purchase of the new land in May 2014,
EBIT Margin (%) 14.7 22.6 23.3 27.4
given the company's current fixed land
Effective Tax Rate (%) 23.0 23.0 23.0 23.0 liability obligations. Upside risks include new
Net Debt (Cash) / BV (x) (0.3) 0.0 0.2 0.1 land acquisitions, the start of operations of
Net Debt (Cash) / EBITDA (x) (3.7) (0.1) 1.2 0.6 Al Mansoura Mall, launch of Al Yosr land
and higher valuations for commercial and
Source: SODIC, EFG Hermes estimates retail land.

2 / 14 pages
SODIC 12 November 2015

Real Estate & Hospitality | Egypt

I. Set our new FV on 0.8x 2016e NAV; reiterate our Buy rating

Fair value EGP14.5 per share is based on 0.8x 2016e NAV; our previous fair
value assumed no discount to our calculated NAV. New assigned discount of 20% is
in line with the stocks average five-year trading discount to its forward NAV
2016e NAV is cut by 12%; implying yet stable operating environment,
with impressive contracted sales recorded; however, we assume slower sales
pace compared to our previous forecast
Current market price assumes no further project launches; a largely
unjustifiable scenario, in our view
Assuming bear market conditions, cash flow position would be constraint
in 2016-17, given mounting land liability obligations

Our new fair value of EGP14.5/share offers 86% upside; hence, we maintain our Buy rating.
We opt to set our fair value based on the average cycle discount, where the stock has been
trading at an average 20% discount to its forward NAV over the past five years. Thus, our new
fair value is based on 0.8x 2016e NAV, compared to our previous value that was set at par to
the calculated NAV. Our calculated NAV is cut by 12% to EGP18.2 per share, down from
EGP20.6 per share. We believe the current operating environment would entail assuming an
average cycle discount rate, in light of what we think are currently more stable market
conditions rather than expectations for further improvement in the operating environment
with selling prices growing at annual double-digit rate and contracted sales exponentially
increasing annually. We assign SODIC the lowest discount to our calculated 2016e NAV
amongst peers, given the companys relatively faster ability to monetise its land bank, proven
in the last two land acquisitions. Both projects were launched within six months from
acquisition.

Fig. 1. SODIC trading at a 20% discount, on average, to its forward NAV during the past five
years

Bear market conditions with

40
net negative sales during the
year post 2011 revolution. The
20 stock was trading at 0.4-0.6x
NAV

-20

-40

-60

-80
Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15

Source: Bloomberg, EFG Hermes

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SODIC 12 November 2015

Real Estate & Hospitality | Egypt

Fig. 2. Derivation of our new fair value of EGP14.5 per share

In EGP
Slower sales Lower selling Higher discount Assigned 20%
pace prices rate New land discount to NAV

0.1

20.6 -1.5 -0.8 -0.2 -3.7 14.5

Former fair new fair value

value

Source: EFG Hermes estimates

It is worth noting that 2014 was a remarkable year for property stocks in Egypt, especially
given the inflating land costs and higher-priced auctions concluded; thus, investors were
rewarding companies for securing land bank. This was witnessed in the stocks performance,
following its acquisition of 1.2 million sqm land plot in the East of Cairo (Villete). However,
starting 2015, this positive trend has reversed, with the stock trading at a widening discount to
its NAV despite continued strong operational performance and contracted sales numbers
recorded. We highlight that we have not seen any signs of a slowdown in the companys pre-
sales numbers, where we expect strong 3Q2015 contracted sales to solidify such view, and the
company would exceed its 2015 sales target of EGP4 billion, on our numbers. Moreover, SODIC
has recently acquired a new land plot in the West side of Cairo, indicating managements
positive outlook on the overall market and future sales.

We attribute the stocks underperformance YTD, which hit property stocks, in general, to
investors concerns over the sectors operating environment, along with a number of company
specific issues including:

1. Ability to secure land bank at prices that would be value-accretive, especially large-sized
land plots that would ensure long-term visibility and growth potential

2. The companys ability to fulfil its fixed obligations in less favourable market condition,
especially in face of the mounting land liability obligations

Tightening cash flow position in 2016-17, primarily due to land obligations

We stress test our assumptions and the companys future cash flow position in light of the
recent increase in fixed obligations related to land acquisitions, mainly Villette. We estimate an
average annual payment for land liabilities including its associated interest of EGP1 billion over
the coming two years, which would place pressure on the companys liquidity position should
the market activity soften, especially given its commitment for the delivery of previously sold
units. We also estimate EGP1.0 billion to be spent in 2015e and EGP1.3 billion in 2016e on
construction activity.

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 SODIC 12 November 2015

Real Estate & Hospitality | Egypt

Fig. 3. SODIC is committed to pay an annual average of EGP1 billion in 2016-17 as land
liabilities
In EGP million

Land liabilities Interest G&A expense

1,400

1,200

1,000

800

600

400

200

0
2015e 2016e 2017e 2018e 2019e 2020e 2021e

Source: SODIC, EFG Hermes estimates

however, receivable collection schedule is still comforting

We expect a strong flow of receivables collections over the coming four years, given the
companys strong sales in the past two years, with contracted sales of EGP7.5 billion between
2013 and up until June 2015. Thus, assuming no major delinquencies, in line with the
companys historical trend, we do not expect any cash flow mismatch, even assuming bear
market conditions with lower-than-expected new sales.

Fig. 4. Accounts receivable collection schedule -as of Fig. 5. Receivable collection on previous sales contributes
December 2014 around one-third of 2016-17e inflows
In EGP million In EGP million

0 1,000 2,000 3,000 4,000 5,000 Inflow Outflow

0 1,000 2,000 3,000 4,000

2015e
2015 1328
2016e
2016 1173
2017e
2017 1034
2018e

2018 737 2019e

2019 384 2020e

Total 2021e

Source: SODIC Source: EFG Hermes estimates

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SODIC 12 November 2015

Real Estate & Hospitality | Egypt

What is the market price implying?

NPV of 2014 accounts receivables - @13% discount and 35% developer margin
plus value of commercial land
minus net debt (2015e)

30% upside to current market price

We believe the current steep discount to our calculated NAV is unjustifiable and real estate
stocks in general would re-rate, in our opinion, albeit awaiting potential strong triggers.
SODICs current stock price assumes no value for the companys 3.1 million sqm of residual land
bank designated for residential use, which we believe is largely unjustifiable and a fairly
unrealistic scenario, especially given the companys planned pipeline of future launches
leveraging on its strong brand name. We estimate total contracted sales of EGP11.2 billion
(2016-20) in the companys current projects.

Fig. 6. SODIC's NAV calculation

In EGP million, unless otherwise stated
Assumed price
Land area (000 sqm) /sqm (EGP) Land value
WTR-Residential 276.0 2,000 552.0
ETR-Residential 298.0 2,500 745.0
Villette-Residential 715.0 2,500 1,788
New land plot 126.0 2,000 252.0
Ceasar 441.0 1,000 441.0
Al Yosr land 1,260 500 630.0
Commercial land 562.0 4,000 2,248
Total land value 3,678 6,656
Net receivables NPV 1,215
Net debt (2015e) (16.0)
Total value 7,887
Discount to 2016e NAV -61.5%
Source: SODIC, EFG Hermes estimates

What if we turn to a bear market?

In bear market conditions, the negative impact on property stocks is usually magnified. Despite
the negative impact on companies operations with a slash in contracted sales, potentially high
cancellation rates that are usually coupled by companies commitment to fixed obligations
including land liabilities, interest expense etc.; the negative impact on stocks is magnified
further by investors assigning higher discounts to NAV, where increased uncertainties would
overweigh its impact and reflects on stocks trading bands. SODIC was trading at 40-60%
discount to its NAV in the bear market conditions years (2011).

6 / 14 pages
 SODIC 12 November 2015

Real Estate & Hospitality | Egypt

Fig. 7. We assume a slump in 2016-17e contracted sales Fig. 8. Lower sales numbers would be driven by less volumes
under our bear case scenario, forecasting around one-third rather than prices, assuming a bear case scenario
of our base case assumptions
In EGP million In sqm

4,500 Base 400,000 Base

4,000 Bear Bear
350,000
3,500
300,000
3,000
250,000
2,500
200,000
2,000
150,000
1,500

1,000 100,000

500 50,000

0 0
2015e 2016e 2017e 2018e 2019e 2015e 2016e 2017e 2018e 2019e

Source: EFG Hermes estimates Source: EFG Hermes estimates

Fig. 9. Our base case sales scenario assumes a comfortable Fig. 10. while our bear case scenario assumes constraint
cash flow position liquidity position in 2016-17
In EGP million In EGP million

Inflow 2,500 Inflow

4,000
Outflow Outflow
3,500
2,000
3,000

2,500 1,500

2,000
1,000
1,500

1,000
500
500

0 0
2015e 2016e 2017e 2018e 2019e 2020e 2015e 2016e 2017e 2018e 2019e 2020e

Source: EFG Hermes estimates Source: EFG Hermes estimates

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 SODIC 12 November 2015

Real Estate & Hospitality | Egypt

II. Project highlights and assumptions

Fig. 11. Projects - Main assumptions
In EGP million, unless otherwise stated
2015e 2016e 2017e 2018e 2019e
East side projects
Eastown Residence (ETR)
BuA sold - sqm 98,012 95,042 89,102 14,850 -
Selling price-EGP/sqm 11,000 12,000 12,500 13,000 -
Contracted sales 1,078 1,141 1,114 193.1 -
Project inflow 564.5 774.0 831.3 765.9 672.1
Project outflow 293.5 438.3 480.3 523.0 398.7
Revenue recognised - 384.0 987.5 1,207 1,317
Cost recognised - 307.3 682.9 751.2 819.5
Villette
BuA sold - sqm 97,525 102,943 92,107 108,361 97,525
Selling price-EGP/sqm 15,000 16,000 17,000 18,000 18,000
Contracted sales 1,463 1,647 1,566 1,950 1,755
Project inflow 496.7 818.7 1,111 1,505 1,761
Project outflow 853.7 952.2 1,009 705.2 442.3
Revenue recognised - - 181.2 1,450 1,812
Cost recognised - - 100.8 806.2 1,008
West side projects
Westown Residence (ETR) & Westown Courtyard
BuA sold - sqm 76,680 59,486 42,266 - -
Selling price-EGP/sqm 8,850 9,500 10,000 - -
Contracted sales 679.2 565.1 422.7 - -
Project inflow 576.8 591.1 596.6 474.4 374.8
Project outflow 132.6 269.2 312.9 99.4 99.4
Revenue recognised 426.8 569.1 616.5 770.4 491.8
Cost recognised 295.8 295.8 309.3 382.5 219.1
North Coast projects
Ceasar
BuA sold - sqm 63,800 46,200 - - -
Selling price-EGP/sqm 12,000 14,500 - - -
Contracted sales 765.6 669.9 - - -
Project inflow 153.1 287.1 287.1 287.1 287.1
Project outflow 202.7 112.2 117.8 123.7 129.9
Revenue recognised - - - 358.9 717.8
Cost recognised - - - 187.8 375.5
Source: EFG Hermes estimates

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SODIC 12 November 2015

Real Estate & Hospitality | Egypt

III. Financial statements

Income Statement (Dec Year End)

In EGP million 2014a 2015e 2016e 2017e
Total Revenue 1,366 1,303 1,799 2,255
COGS (891) (785) (1,088) (1,328)
Gross Profit 475 517 711 927
Gross Profit Margin (%) 34.8 39.7 39.5 41.1
SG&A (289) (312) (343) (377)
Other Operating Income (Expense) 44 75 81 86
EBITDA 247 306 479 670
EBITDA Margin (%) 18.1 23.5 26.6 29.7
Depreciation and Amortisation (16) (26) (30) (34)
Net Operating Profit 230 280 449 636
Net Interest Income (Expense) (30) 14 (30) (18)
Income before Taxes and Zakat 200 295 419 619
Taxes and Zakat (46) (68) (96) (142)
Net Income before Minority Interest 154 227 322 476
Minority Interest 12 12 12 13
Reported Net Income 142 215 310 464
Normal Reported EPS (EGP) 0.4 0.6 0.9 1.4
Source: SODIC, EFG Hermes estimates

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SODIC 12 November 2015

Real Estate & Hospitality | Egypt

Balance Sheet (Dec Year End)

In EGP million 2014a 2015e 2016e 2017e
Cash 2,105 1,841 1,700 1,554
Short-term Receivables and Prepayments 1,867 1,774 1,679 1,467
Development Properties (and Land) 6,240 7,284 8,418 9,465
Other Current Assets 20 17 19 21
Total Current Assets 10,232 10,917 11,816 12,506
PP&E 127 207 308 397
Investments & Financial Assets 4 4 4 4
Projects Under Construction 0 0 0 0
Net Investment Properties after Fair Value 18 18 21 22
Receivables and Prepayments 3,319 4,530 5,587 5,802
Goodwill & Intangibles 0 0 0 0
Other Non-Current Assets 5 5 5 5
Total Non-Current Assets 3,473 4,765 5,925 6,230
Total Assets 13,705 15,681 17,741 18,736
Issued Capital and Share Premium 1,356 1,356 1,356 1,356
Reserves 1,535 1,535 1,535 1,535
Retained Earnings 103 318 628 1,092
Net Worth 2,994 3,209 3,519 3,983
Minority Interest 94 94 94 94
Total Equity 3,088 3,303 3,613 4,077
Long-Term Debt 961 1,334 1,000 667
Other Non-Current Liabilities 1,924 1,610 1,449 1,117
Total Non-Current Liabilities 2,885 2,943 2,449 1,783
Short-term Payables and Accrued Expense 595 952 762 609
CPLTD 238 492 1,292 1,292
Customer Advance Payments (ST) 6,097 7,304 8,687 9,794
Dividends Payable 0 0 0 0
Total Current Liabilities 7,731 9,435 11,679 12,876
Total Liabilities 10,616 12,378 14,128 14,659
Total Equity and Liabilities 13,705 15,681 17,741 18,736
Source: SODIC, EFG Hermes estimates

Cash Flow Statement (Dec Year End)

In EGP million 2014a 2015e 2016e 2017e
Cash Operating Profit after Taxes 260 241 340 498
Change in Working Capital (739) (1,007) (728) (198)
Cash Flow after Change in Working Capital (480) (766) (387) 301
CAPEX and Investments (11) (11) (17) (23)
Free Cash Flow (491) (777) (404) 277
Net Financing 1,863 627 467 (333)
Change in Cash 1,372 (151) 62 (56)
Source: SODIC, EFG Hermes estimates

10 / 14 pages
RATING AND FAIR VALUE CHART

SODIC (OCDI.CA)
EGP 7.79 (11-Nov-2015)
PRICE (EGP) 12-Nov-2014 to 11-Nov-2015
22

4/15/2015
20

18

16
11/18/2014

14

12

10

6
11/12/2014 2/12/2015 5/12/2015 8/12/2015

Closing Price Fair Value Postive Chg Fair Value Negative Chg Recommendation Chg

Date From To Price

18-Nov-2014 Not Rated (N/R) Buy EGP15.40
15-Apr-2015 Fair Value EGP19.17 Fair Value EGP20.61 EGP12.74

RATING DISTRIBUTION

Rating Coverage Universe %

Buy 53%
Neutral 43%
Sell 4%
N/R U/R 0%

11 / 14 pages
ANALYST CERTIFICATION

I, Mai Attia, hereby certify that the views expressed in this document accurately reflect my personal views about the securities and companies that are the subject of this report. I also
certify that neither I or my spouse[s] or dependants (if relevant) hold a beneficial interest in the securities that are subject of this report. I also certify that no part of my respective
compensation was, is, or will be, directly or indirectly, related to the specific recommendations or view expressed in this research report.

IMPORTANT DISCLOSURES

EFG Hermes Holding, or any of its subsidiaries or officers (other than the authors of this report) may have a financial interest in one or any of the securities that are the subject of
this report. Funds managed by EFG Hermes Holding SAE and its subsidiaries (together and separately, EFG Hermes) for third parties may own the securities that are the subject
of this report. EFG Hermes may own shares in one or more of the aforementioned funds or in funds managed by third parties. The author(s) of this report may own shares in funds
open to the public that invest in the securities mentioned in this report as part of a diversified portfolio over which the author(s) has/have no discretion. The Investment Banking
division of EFG Hermes may be in the process of soliciting or executing fee-earning mandates for companies (or affiliates of companies) that are either the subject of this report or
are mentioned in this report. Research reports issued by EFG Hermes are prepared and issued in accordance with the requirements of the local exchange conduct of business rules,
where the stock is primarily listed.

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purposes only. It is not intended as an offer or solicitation or advice with respect to the purchase or sale of any security.

It is not tailored to the specific investment objectives, financial situation or needs of any specific person that may receive this report. This research report must not be considered as
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advise potential investors to seek financial guidance when determining whether an investment is appropriate to their needs.

Our investment recommendations take into account both risk and expected return. We base our long-term fair value estimate on fundamental analysis of the companys future
prospects, after having taken perceived risk into consideration. We have conducted extensive research to arrive at our investment recommendation(s) and fair value estimate(s) for the
company or companies mentioned in this report. Readers should understand that financial projections, fair value estimates and statements regarding future prospects may not be
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EFG Hermes Holding SAE is not registered as a broker-dealer with the US Securities and Exchange Commission, and it and its analysts are not subject to SEC rules on securities
analysts certification as to the currency of their views reflected in the research report. EFG Hermes Holding SAE is not a member of the Financial Industry Regulatory Authority (FINRA)
and its securities analysts are not subject to FINRAs rules on Communications with the Public and Research Analysts and Research Reports and the attendant requirements for
fairness, balance and disclosure of potential conflicts of interest.

This research report is only being offered to Major US Institutional Investors and is not available to, and should not be used by, any US person or entity that is not a Major US
Institutional Investor. EFG Hermes Holding SAE cannot and will not accept orders for the securities covered in this research report placed by any person or entity in the United States.
Orders should be placed with our correspondent, Auerbach Grayson & Co. 212-557-4444.

A Major US Institutional Investor who may receive and use this report must have assets under management of more than USD100,000,000 and is either an investment company
registered with the SEC under the US Investment Company Act of 1940, a US bank or savings and loan association, business development company, small business investment
company, employee benefit plan as defined in SEC Regulation D, a private business development company as defined in SEC Regulation D, an organization described in US Internal
Revenue Code Section 501(c)(3) and SEC Regulation D, a trust as defined in SEC Regulation D, or an SEC registered investment adviser or any other manager of a pooled investment
vehicle.

Investment Banking Business

EFG Hermes, or any of its subsidiaries does and seeks to do business with companies mentioned in its research reports or any of their affiliates. As a result, investors should be aware
that the firm or any of its subsidiaries may have a material conflict of interest that could affect the objectivity of this report.

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GUIDE TO ANALYSIS

EFG Hermes investment research is based on fundamental analysis of companies and stocks, the sectors that they are exposed to, as well as the country and regional economic
environment.

In special situations, EFG Hermes may assign a rating for a stock that is different from the one indicated by the 12-month expected return relative to the corresponding fair value.

For the 12-month long-term ratings for any investment covered in our research, the ratings are defined by the following ranges in percentage terms:

Rating Potential Upside (Downside) %

Buy Above 15%
Neutral (10%) and 15%
Sell Below (10%)

EFG Hermes policy is to update research reports when appropriate based on material changes in a companys financial performance, the sector outlook, the general economic
outlook, or any other changes which could impact the analysts outlook or rating for the company. Share price volatility may cause a stock to move outside of the longer-term rating
range to which the original rating was applied. In such cases, the analyst will not necessarily need to adjust the rating for the stock immediately. However, if a stock has been outside
of its longer-term investment rating range consistently for 30 days or more, the analyst will be encouraged to review the rating.

COPYRIGHT AND CONFIDENTIALITY

No part of this document may be reproduced without the written permission of EFG Hermes. The information within this research report must not be disclosed to any other person if
and until EFG Hermes has made the information publicly available.

CONTACTS AND STATEMENTS

Report prepared by EFG Hermes Holding SAE (main office), Building No. B129, Phase 3, Smart Village, KM 28, Cairo-Alexandria Desert Road, Egypt 12577, Tel +20 2 35 35 6140 | Fax
+20 2 35 37 0939 which has an issued capital of EGP 2,391,473,750.

Reviewed and approved by EFG Hermes KSA (closed Joint Stock Company) which is commercially registered in Riyadh with Commercial Registration number 1010226534, and EFG
Hermes UAE Limited, which is regulated by the DFSA and has its address at Level 6, The Gate, DIFC, Dubai, UAE. The information in this document is directed only at institutional
investors. If you are not an institutional investor you must not act on it.

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