Company News

Equity Research

March 2011

Addoha Maintain recommendation

Strategic Partnership with ALEM BUY

DEVELOPMENT OF 37,300 LOW AND MIDDLE-END UNITS STARTING 2012

Target price Yesterday Addoha announced a partnership with the housing and military equipment agency (ALEM) to develop
DH 160 a 37,300 low and middle-end units project. A joint venture will be created and will hold the project like in the four
other joint ventures underwent by Addoha and its partners : Immolog in partnership with CGI, Mabani Zellidja in
Share price as of 01/31/2011 partnership with Somed, Beladi Hadj Fatah in partnership with the Jamaï group and Al Qudra Addoha in
partnership with the Emirates Holding Al Qudra. The four previous JVs are expected to already develop around
DH 109
50,000 low and middle-end units.
CFG25 Index: 26,610 Among the 37,300 expected units, 31,700 units will be developed as part of low-end programs while 5,600 units
shall be developed as part of middle-end programs. The required 230 hectares of land are already secured as it
is currently owned by ALEM which will transfer it to the new JV. First deliveries, which will bring additional units
Analyst to military personnel and progressively transfer the military facilities currently located in Casablanca, Oujda and
Fayçal Allouch Kénitra, are expected by 2012-2013 and will be, according to us, undertaken over the upcoming 7 to 8 years.
f.allouch@cfgmorocco.com Finally, the project is expected to generate DH11bn revenues, around DH3bn cash-flows and nearly DH2bn free
cash-flows during the whole period.

Sales We shall recall that in addition to the new partnership with ALEM, the launching of Al Firdaous project during
Mohammed Essakalli February 2011 by His Majesty the King Mohamed VI (the project held by Immolog, is planning the development
Amira Mestari of 34,460 additional units including 17,000 low-end units during 10 years, on 650 hectares land in Aïn Aouda
Bachir Tazi near Rabat) comforts our initial long term scenario of 20,000 to 25,000 annual low-end units development
beyond 2015. The group’s know-how and its current production capacity brings Addoha at the top of our present
Tel: (212) 522 25 01 01
ranking of local private developers. The significant increase of production during 2010-2012 will undoubtedly
serve as a barometer of how the developer will be able to deliver in time and by 2015 the announced 150,000
low and middle-end units as well as the units relative to recent partnerships. Let us remind that a self-financing
model applies on the group’s low-end programs development.
In term of forecasts, we are still expecting a strong performance from the developer in 2010, following the
delivery of approximately 20k units generating DH7.1bn revenues (+19%), EBIT of DH2.5bn (+63%) and Net
Income group share of DH1.5bn (+66%). We shall adjust our previous estimates in terms of low-end units
Reuters RIC: delivery beyond 2013 after Addoha’s 2010 yearly-earnings disclosure, which is expected during March 2011.
ADH.CS We therefore maintain our buy recommendation on the stock and our target price of DH160 (+47% upside)
comforted by the recent partnership with ALEM and the launching of Al-Firdaous project.
Sector:
Real-Estate

Outstanding shares:
315,000,000
Valuation &
in DHm 2008 2009 2010e 2011e 2012e 2008 2009 2010e 2011e 2012e
Return
Market capitalisation: Consolidated turnover 4 819 6 012 7 152 9 103 10 864 P/E 29,7x 39,1x 23,6x 17,6x 14,5x
EBIT 1 990 1 552 2 529 3 275 3 896 EV/Sales 8,7x 7,0x 5,9x 4,6x 3,9x
DH41,940m EBIT margin 41,3% 25,8% 35,4% 36,0% 35,9% EV/EBIT 21,1x 27,0x 16,6x 12,8x 10,8x
Net Profit Groupe Share 1 155 878 1 455 1 947 2 369 D/Y 1,4% 1,4% 1,5% 2,0% 2,4%
Weekly average volume Net margin 24,0% 14,6% 20,4% 21,4% 21,8% ROCE 13,1% 8,9% 11,3% 13,7% 15,5%
Source : Addoha, CFG estimates ROE 23,7% 16,9% 15,1% 18,6% 21,2%
DH 21,308k Source : CFG estimates

Addoha share price and volumes Relative strength ADH/CFG25

250 800
120
700
Volume (DHm)

200
600
Price (DH)

110
150 500
400
100 100
300
200
50 90
100
0 0
80
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