Egyptian developer Amer looks ripe for rebound

Stock in the Egyptian construction company Amer Group could be due for an upswing following a disappointing performance after its IPO last month, analysts say.

Amer Group, a Sharia-compliant property developer based in Egypt, has been a disappointment since its initial public offering (IPO) last month but some analysts think the stock is poised for a turnaround.

The company develops mixed use, family-oriented resort destinations as well as shopping malls and restaurants.

"The investment case stems from the firm's diversified business model," said Alfred Fayek, the head of MENA equity sales at EFG-Hermes in Dubai.

Amer went public last month and was 5.8 times oversubscribed at a price of 2.80 Egyptian pounds a share. Since then it has slipped nearly 4 per cent, closing yesterday at Dh2.69.

Mr Fayek believes the company has strong branding within Egypt and will benefit from the country's favourable demographics - 60 per cent of the population is under the age of 30. The supply and demand gap in property in Egypt is still increasing by 200,000 units a year and Amer should capitalise as one of the first developers in Egypt to cater to the middle-income segment, he said.

In contrast to other Egyptian developers, Amer purchased most of its land through auctions and not direct allocation, avoiding potential legal disputes with the government. The developer won a bid for a 2.8 million square metre plot south of Cairo on Sunday.

Its land portfolio has been based on prime locations around the coastal areas in Egypt so far.

By serving as both developer and contractor, the company is able to complete projects quickly and control costs.

It has also partnered Dubai's Arabtec in a joint venture in Egypt, of which it owns 45 per cent.

Amer is also expanding into Syria in anticipation of what some think will be the next property boom. The tourism sector has grown by 11.2 per cent annually from 2005 to last year, hosting as many as 1.7 million tourists in the first quarter of this year alone. There are only eight hotels operating in the country.