Talaat Moustafa Q2 profit up, land case looms

Talaat Moustafa Group, Egypt's biggest listed property developer, said second-quarter profit rose 5 per cent but home sales dipped compared to the first quarter after a court ruled against one of its land deals.

Talaat Moustafa reported a second-quarter net profit of 338 million Egyptian pounds ($60 million), compared with a forecast for 372m.

New home sales, most of which are made before construction and do not enter the income statement until houses are complete, which can take as long as five years, were higher than last year but down from the first quarter, according to Reuters calculations.

Talaat Moustafa shares were down 1.4 per cent at 7.10 pounds by 1115 GMT, in line with the broader Egyptian market, down 1.3 per cent.

An Egyptian court ruled in June a government body broke the law when it sold land for the company's main project directly to a Talaat Moustafa unit instead of opening it up to bidding, which analysts have said could hurt sales in the development.

The state and the company have appealed.

"Second-quarter sales are sequentially down. Typically summer is the best sales period, which they should have capitalised on," said Naeem Holding analyst Hisham Halaldeen.

"I think the case had an impact on sales of their flagship project Madinaty. The sales will continue to be affected until a resolution is found for the case," Halaldeen said.

Talaat Moustafa, which owns land in Egypt and Saudi Arabia, said it sold 2.2bn pounds worth of homes in the first half. It previously said it sold 1.2bn pounds of homes in the first quarter, implying about 1bn of sales in the second quarter.

Pyramids Capital vice chairman Hashem Ghoneim said declining equities markets abroad and the court case had hit Talaat Moustafa's stock price, making the shares look cheap.

"After the court case is over with Madinaty, and I believe it is going to go in favour of Talaat Moustafa, I think the stock will appreciate," he said.

Madinaty, the company s main project, will include homes, schools, hotels and a golf course on 8,000 feddans (8,300 acres) of land on Cairo's outskirts.