Corporate news
Palm Hills Developments – PHDC
Commentary on Q1 2026 Results:
The company recorded revenue growth of 11.3% year-on-year to EGP 9.35 billion, supported by the recognition of accumulated sales revenues and continued strong activity across various projects. However, a nearly 30% increase in cost of revenues exerted pressure on profitability levels, leading gross profit to decline by 11.8% to EGP 3.31 billion, with gross profit margin narrowing to 35.4% compared to 44.7% in Q1 2025.
This decline is mainly attributed to the accelerated pace of construction spending, as the company spent around EGP 4.6 billion on construction works during Q1, representing annual growth of 61%. This is in line with its preparations to deliver approximately 1,200 units in 2026 across several key projects. The company also continues to execute its expansion strategy through geographic diversification and revenue stream expansion, particularly following its recent entry into the education sector and its expansion into the UAE market through its Abu Dhabi project.
On the sales front, the company recorded strong contracted sales of EGP 52 billion during the first quarter, driven by solid performance across all operating regions. East Cairo projects contributed EGP 29.5 billion, West Cairo EGP 10.6 billion, Badya project EGP 6.0 billion, while North Coast and Alexandria projects recorded EGP 5.9 billion.
At the profitability level, net profit after tax declined by approximately 26% to EGP 1.22 billion, compared to EGP 1.65 billion in Q1 2025, impacted by higher direct costs as well as increased operating and administrative expenses. General and administrative expenses rose by 28.9%, increasing by more than EGP 312 million, which negatively affected the bottom line.
Net profit margin also declined to 13.1% in Q1 2026 versus 19.7% in the same period last year, reflecting pressure from rising operating costs and accelerated expansion activities.
On the balance sheet side, net debt increased to EGP 3.3 billion as of March 2026 due to higher construction-related spending, while receivables and post-dated cheques reached approximately EGP 260 billion, reflecting strong future cash flow visibility and a solid revenue pipeline. Cash and cash equivalents increased to EGP 9.1 billion compared to EGP 6.7 billion in the corresponding period.
The stock is currently trading at a P/E multiple of around 10x, below the sector average of approximately 13.7x.
Mostafa Amin
Equity Analyst
*MAmin@egy.Primegroup.org