SOLIDERE: Pockets of Value
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| Monopolistic Position |
The Lebanese Company for the Development and Reconstruction of Beirut Central District (Solidere) is the sole owner of Beirut Central District (BCD) and a leading master developer in the Middle East and North Africa (MENA) region. It gained its image and reputation in the region owing to the successful development of Beirut Central District. |
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| Unique Resources at Low Cost |
| Having acquired its land bank in 1994, and having implemented substantial infrastructural developments in Beirut Central District, the company has successfully capitalized on the surge in real estate prices in Lebanon. The company’s current land bank, strategically situated in the most prestigious area in Lebanon, stands at 1.9 million sqm of built-up-area (BUA), of which 1.5 million sqm are located at the sea front of Beirut city. |
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| Ample Liquidity Providing Strong Buffer |
Solidere enjoys healthy liquidity, and its prospective financial situation looks robust. Free cash flows remain positive throughout our forecast period, which will allow the company to easily meet future funding needs.
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| Well–positioned for Future Growth through Solidere International |
| Owing to its solid financial position, Solidere is well-positioned to benefit, through Solidere International (SI), from the downturn in the region’s real estate sector. The company’s cash level is high at a time when funding is a major concern for real estate developers, which will allow it to tap into profitable projects in the coming years. |
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| Valuation |
| We initiate coverage on Solidere with a Buy recommendation. Our estimated fair value of USD 35.09 provides investors with an upside potential of 44.05%, based on the current price of USD 24.36 per share, while offering investors a high dividend yield of 4% amid the current low interest rate environment. |
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