 January 13th, 2025
Andrin Renz 6300 Zug, Switzerland (Minority Shareholder) Dear Fellow ODH Shareholders, Before you make a decision, ask yourself: Is CHF 5.60, representing a 335 million market cap and 600 million enterprise value, a fair price for a company with billions in assets and stable, growing cash flows? For most of us, the answer is a clear “No.” The timing could not be worse for selling the shares at such a low price - likely the very bottom. A turnaround in the stock price is long overdue and potentially inevitable once the company begins paying dividends, providing investors with real cash instead of reinvesting everything back into infrastructure and city building. As a long-time investor in this company, I must raise my concerns about the tender offer by LPSO Holding Ltd., owned by the Sawiris family, to acquire our shares at CHF 5.60 per share - or, more precisely, about the risk of a potential squeeze-out. The infamous CBRE report that went unnoticed In 2018, a valuation by CBRE Group Inc. estimated the undeveloped land in El Gouna alone at USD 1.82 billion (!), nearly 170 times its book value. Yet, today, ODH’s market capitalization stands at USD 335 million, a fraction of its true worth. Orascom Development operates 10 destinations across 7 countries, including Egypt, Oman, Montenegro, Switzerland, and the United Kingdom. The CBRE report was just about the land of a single portfolio destination. In total, the company is sitting on 100 million square meters of premium land - an area roughly the size of Paris. The company's assets include not only land, but also hotels, marinas, golf courses, residential communities, a hospital, super markets, sports facilities and even an airport and a football stadium. This isn’t just undervaluation - it’s one of the most striking mispricings I’ve encountered. I ask all investors to please take a second look at Orascom's assets and help me push the market for a fair valuation and demand from the board a second fairness opinion - and at all costs - to prevent the squeeze-out. After years of planting, the harvest is left behind. For years, ODH has strategically reinvested its profits from one destination into building entire towns from the ground up in new locations. In my opinion, this was a strategic decision I could support. Developing a city to reach critical mass typically requires 10–15 years of substantial infrastructure investment. For a city to thrive and become as profitable as El Gouna in Egypt, it must reach a point where it provides a comprehensive range of infrastructure, services, shops, and activities to support a vibrant community and attract visitors, real estate buyers, and businesses. Once this critical threshold is achieved, the city has the potential to transform into an unstoppable cash cow. In the early stages, some services need to be financially supported or subsidized to address the lack of infrastructure and amenities necessary to attract residents, tourists and businesses. However, as the population grows and the city becomes more established, the dynamic shifts - businesses want to be in the area and capitalize on the opportunities. I am convinced that following this long-term strategy of reaching critical mass more quickly was the right approach, and therefore, instead of paying dividends, sending cash from one destination to another was the right thing to do. However, not if we are squeezed out at rock-bottom prices, causing all the money invested in infrastructure and the resulting land appreciation to be simply ignored. The magic of the business model What many investors and even analysts don't understand is the core of the business model. Orascom is not just a normal real estate developer. The enormous land bank was once purchased only for symbolic prices because it was in a remote location and has now - thanks to all the infrastructure - massively appreciated because it is no longer remote, empty land but is situated right next to vibrant, newly developed cities. The long-term vision of Samih Sawiris and Orascom is genius, and I fully support it. However, as the CBRE report has shown, all the assets and the land bank are not adequately reflected in the books; we could potentially witness one of the biggest stock recovery stories on the Swiss stock exchange once other investors recognize the undervaluation of the land bank and the assets. However, we must prevent ourselves from being squeezed out. Orascom has started building multiple new destinations in different countries around the same time, 15-20 years ago. Many towns are now already beginning to contribute positively to the group’s financials. Why sell now, when we are so close to realizing the full potential of those new cities? A premium that hides the real value At first glance, CHF 5.60 might seem attractive:
But let’s be honest - a 40% premium on an already massively undervalued price still leaves us far, far, far below the true intrinsic value of our shares. For a deeper analysis of ODH's valuation, I encourage you to review my two detailed research reports:
If you're interested in challenging my assumptions, sharing insights, or contributing in any meaningful way, I encourage you to get in touch with me. What can we do?
Reach out via: www.never-stop-asking.com/community Email: [email protected] Sincerely, Andrin Renz Minority Shareholder
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