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Casablanca – Real Estate developer Résidences Dar Saada reports result in line with guidance.
Consolidated revenue soared by 19% to MAD 2,075 million driven by higher deliveries which stood at 6,761 units (up by 19% YoY). Also, consolidated operating income jumped by 4% YoY to MAD 535 million while operating margin slid by 3.7 percentage points to 25.8%.
At the bottom-line level, consolidated net income rose by 4% to MAD 468 million while net margin decreased by 3.2 percentage points to 22.6%. The release did not mention the reasons behind the erosion of margins.
It is worth mentioning that net income came almost in line with guidance (achievement rate of 99.6%). Management guided for the first time at the occasion of their 2012 bond issue before publishing their comprehensive business plan at the occasion of their IPO in December 2014.
Since their IPO, they published three times annual results at the occasion of the FY-14, FY-15 and their FY-16 results. At the exception of FY-15 results, when they posted results in-line, Management have solely posted beats to their guidance which has always been issued at the bottom-line level so far. With the 2016 results, management now enjoys a track record of delivering at least what they promise, which should spur investors’ confidence in the stock.
Pre-sales stood at 4,133 units corresponding to revenue of MAD 1,590 million and to 122% of the annual objective. Moreover, total pre-sales stand at 10,000 units which correspond to a secured revenue of MAD 3 billion or 1.5 years of revenue (based on the 2016 figure).
This indicates that the market remains robust which we think is attributable to the localization of the groups’ projects in the busy and dynamic Casablanca-Rabat axis. Indeed, it is in the Casablanca-Rabat axis where many households can afford to acquire a social housing unit. According to the release, half of Dar Saada’s land bank is located in this region.
At the balance-sheet level, while the top-line is expanding, receivables are not soaring indicating that cash generation is properly materializing. Receivables stood at 5.0 months of sales, lower than competition. Also, gearing remained stable at 39% and the inventory of finished products plummeted by 21%.
At the occasion of the 2016 results, Mr. Faycal Idrissi Qaitouni was assigned as the new CEO of Résidences Dar Saada replacing Mr. Amine Guennoun who was promoted as the head of real estate within the Groupe Palmeraie who owns Résidences Dar Saada.
