Listed companies to rebound in the second half of 2020, analysts

Listed companies are betting on offsetting Coronavirus-induced losses in the second half of this year in the face of the dwindling  activities and sales, according to analysts.  

With the aim of compensating for cancelled events such as City Scape, most flagship companies are so well positioned to speed up construction and marketing campaigns once the economic life returns to normal. 

Egypt’s biggest 6 real estate  listed companies recorded EGP71.5bn sales in 2019 up from EGP59.8bn in 2018. 

The economic fallout of coronavirus hit hard most sectors including properties whose sales and liquidity dwindled  remarkably, according to head of Eagle Financial Consultancy Yaser Emara.

“ Heavyweight companies with robust financial positions can withstand this crisis, but small and medium-sized firms with lower cash at hand are burdened with heavy financial obligations including land installments,” said he, predicting mergers and acquisitions to surge in the upcoming period in response. 

Real estate companies are putting in place scenarios for  whipping up sales in the second half of 2020 while taking advantage of interest rates cuts of 3% that were passed recently, he explained. 

“ Interest rate cuts help secure financing necessary for  expediting projects and fulfilling schedules of construction.” 

On the other hand, real estate analyst at Pharos Holding Miar Ashri said that the governmental precautionary measures including curfew extending from 8pm to 6am caused construction  to lag behind schedule and sales to plummet. 

“With outlooks remain hazy owing to Coronavirus, any financial forecasts  of partners in terms of revenues, earnings or sales hinge upon putting an end to the crisis,” she said. 

 The unchanged schedule of previous installment payments as well as the availability of raw materials in the local market  are cited among positive factors benefiting the real estate companies. 

HC Securities and Investment bank expects real estate companies to see demand rebounding by this year end in case economic conditions stabilize and Coronavirus gets under control. 

Declining interest rates are privileging the real estate companies in two respects. First, clients will be driven to inject more of their savings into properties. Second, lower interest rates help slash costs of variable rate loans. 

Palm Hills and Heliopolis Co. for Housing and Development are singled out among best beneficiaries of the latest rate cuts because massive debts are owed by  both, according to a research note issued by the bank.