 I can’t believe it’s already been six years! Time really flies. Five and a half years ago, in June 2019, I wrote my first-ever research report about Orascom Development - a company that builds entire towns for tens of thousands of people across multiple countries. It was six years ago, in October 2018, when their previous CEO shared a quote I’ll never forget: “We believe our assets are not adequately reflected in ODH's stock price.”  The Intro At that time, I had already been following this company for a few years. I admired their vision and long-term strategy—more on that later. Since I couldn’t find a good research report about the company, I decided to write one myself. From what I could analyze externally, I agreed with the CEO’s statement, but I wanted to test and challenge my own assumptions. So, in the summer of 2019, I went for it... Today, it’s November 2024, and I’m sitting in a coworking space in District 1, the heart of Ho Chi Minh City, Vietnam. Outside, the city buzzes with energy—street vendors and hustlers fill the sidewalks, mingling with tourists and businesspeople in suits. You can feel it in the air - the incredible potential of Asia. Vietnam’s economy has been growing steadily and rapidly, with rates above 8%. I can’t help but wonder: has Orascom finally turned its focus toward the booming ASEAN market? It’s something I’ve hoped they would do for years. Inside, the coworking space is quiet and calm. As I look out the large window of this modern skyscraper at the bustling streets below, my thoughts drift to Orascom Development. How much has it actually changed over the years since I last took a deep dive? The Background Story In October 2018, when then-CEO Khaled Bichara expressed his belief that the stock was undervalued, the market cap stood at $547 million. Today, in November 2024, the market cap is just $233 million. Hmm... Logically, this means the company is either struggling significantly or was heavily overvalued and has now adjusted to a more realistic valuation. Let’s take a closer look… For those reading about ODH for the first time, here’s a very quick summary of my initial research: Orascom Development (ODH) is a Swiss-based company founded in 1989 in Egypt by Samih Sawiris. The Sawiris family is among the wealthiest and most influential in the Middle East. ODH focuses on constructing entire towns in seven countries:
Back in 2018, ODH seemed significantly undervalued. Despite owning assets worth billions, its enterprise value was only in the millions. The company owned 101 million square meters of land, with just 17% developed. That's, by the way, almost the size of Paris. A CBRE Group Inc. valuation estimated that the undeveloped land in El Gouna alone was worth USD 1.82 billion—170 times its book value. However, five years later, the share price and market cap have all declined further. The share price is now CHF 3.90, reflecting a market cap of only $233 million (USD 260 million). What. A. Disaster.  How is that even possible? Two Major Shocks: One obvious reason is the impact of COVID-19, which hit a company deeply rooted in the tourism industry. However, just before the pandemic, in January 2020, the charismatic CEO Khaled Bichara tragically died in a car accident. At the time, the company seemed to be gaining a lot of momentum. Bichara had laid out a new strategy and a clear path to profitability, and many believed he was the right person, for the right job, at the right time. I was told Khaled Bichara was a very results-driven leader. He was a turnaround manager who had a strategic mindset and was actually able to inspire people. Bichara always wanted measurable success. He once gave a TED Talk about the "Illusion of Stability." It's still on YouTube if you want to rewatch it—I highly recommend it. He also put a lot of focus on the technological progress within Orascom, a company that, until then, was still very much offline. He was a textbook turnaround manager. He was a human with a goal and a vision. And he was known for his very, very high energy. In other words, he was exactly what the Orascom needed after years of growing bureaucracy. It’s important to consider that 30 years ago, the company started with a single destination in Egypt (El Gouna) and expanded by acquiring more land and kickstarting new projects in various countries as part of its diversification strategy. The increasing headcount and resulting inefficiencies became a significant challenge, as is often the case when scaling up. Founder Samih Sawiris had previously admitted that he was too chaotic to be an effective CEO for such a large company. Between 2011 and 2012, Gerhard Niesslein briefly held the position, but it wasn’t a perfect fit. Sawiris resumed leadership until Bichara took over in 2015. In late 2020, Omar El Hamamsy was appointed CEO. These two disasters—Bichara's passing and the pandemic—happened almost simultaneously, stalling much of the progress the company had started to make.  A Glimmer of Progress Between 2020 and 2023, however, ODH showed improvements:
 The devaluation of the Egyptian pound is frequently mentioned as a major challenge, often eroding significant portions of their operational profits. I just wish they would take a more active approach to hedging against it. That said, given their profitability, I’m surprised the share price has dropped even further since my last research report. While I still believe the company is massively undervalued—now even more so than five years ago—let’s dive deeper into the numbers and facts:
 The Value Game In 2018, CBRE valued land in El Gouna at CHF 80 per square meter. By 2024, ODH sold land at CHF 200–250 per square meter. Let that sink in. Despite these gains, ODH’s market cap remains shockingly low, even lower than ODE's, which ODH almost entirely owns. If there's a flaw in my thinking or the numbers, please let me know. I encourage you to fact-check and share your insights in the comment section below.  Debt and Liquidity Orascom currently has a total debt of CHF 470.2 million and cash reserves of CHF 197.5 million, resulting in a net debt of CHF 272.7 million. This level of debt is manageable within the real estate sector, where companies typically operate with higher leverage. Debt/Equity: 1.08x For every CHF 1 of equity, ODH has CHF 1.08 of debt. This is considered reasonable for real estate companies, where ratios can often range from 1.0x to over 8.0x, depending on the business model. Debt/Total Assets: 0.28x Only 28% of ODH’s total assets are financed through debt. This is well below industry averages, where 50%-60% of assets are often financed with debt. Net Debt/Adjusted EBITDA (Long-Term): 1.35x ODH’s net debt is only 1.35 times its earnings before interest, taxes, depreciation, and amortization. A ratio below 3.0x is generally considered healthy in the real estate sector, indicating that the company generates sufficient earnings to comfortably service its debt. These metrics show quite a strong liquidity and debt management. However, it’s worth noting that ODH completed a capital increase in April 2023, which definitely contributed to their improved financial position. However, it’s also important to note that their books contain significant hidden value, which could - on the other hand - improve some of the metrics mentioned above. That forms the core thesis of this research report.  What Is the Core of Their Business? Orascom has a magical yet simple business model: they build entire towns from scratch. Their strategy is straightforward: Step 1: They acquire VERY large tracts of very cheap land in remote areas (through government agreements) Step 2: They develop key infrastructure, hotels, and real estate and much more. Step 3: They develop entire towns, sometimes even with hospitals or sports clubs—for example in the town of El Gouna with the El Gouna Football Club, which competes in the top tier of the national league. In the same destination, they host cultural highlights like the internationally renowned El Gouna Film Festival or the El Gouna International Squash Open, a major tournament that attracts the world's top-ranked players. Alongside these, they have hosted Ironman competitions (for example in Hawana Salalah) and other world-class events in their various other destinations. Basically, they offer everything you’d expect in a fully functioning 'normal' city. Step 4: Now, even after years of "city building," they still hold extraordinary amounts of empty land, much of which could now be sold at significantly higher prices. This land remains recorded in Orascom's books at its original, much lower valuations, representing an unprecedented hidden reserve of potential value. That's exactly why I believe so much in the company and in the share price. However, feel free to challenge me here. Harvesting the rewards In my last research report, I predicted that the share price would rise once the company announced plans to actively monetize its land, such as through sales to third parties or joint ventures. For years, founder Samih Sawiris avoided selling land to third-party companies, even though it could have generated quick and easy profits. He believed that selling would mean losing control over parts of the city—control that is essential for managing and maintaining a unified destination. I agree—having full control over the city ensures far greater efficiency. Selling off pieces weakens the unique advantages of private cities compared to government-run ones, where many stakeholders and competing interests often complicate progress. However, with the substantial rise in land value and the maturity of their destinations, adopting a monetization strategy now seems logical. Joint ventures or strategic land sales could allow Orascom to finally reap the rewards of years of restraint. If the price is right—like in the case of El Gouna—they might even unlock this value while retaining overall control. My thesis was that once Orascom’s management announced this strategic shift, investors would recognize that the "hidden value" in the company’s books was no longer theoretical but about to be converted into real cash—possibly paid out as dividends. I expected this to generate significant investor interest, given Orascom’s vast land holdings and the potential to sell parts for hundreds of millions, or even billions, providing swift cash flow to investors. As I mentioned earlier, they announced this strategy change 2–3 years ago. Yet, surprisingly, the share price dropped...  What Makes Orascom Different Compared to Other Real Estate Developers? Building Entire Towns Unlike most developers who focus on single resorts, Orascom creates fully integrated towns (!) with residential areas, commercial spaces, hotels, and infrastructure. These are designed as self-sustaining communities. El Gouna, their flagship destination, has 25k (!) permanent residents and is still growing... three is still empty land. Strategic Land Deals Orascom secures very large amounts of land at very low costs through government agreements. This is possible thanks to the Sawiris family’s strong connections and their proven success with projects like El Gouna. Ultra Long-Term Vision While many developers aim for quick profits, Orascom holds onto undeveloped land not for years, but for decades, allowing its value to increase as their towns grow and mature. Diversified Income Orascom doesn’t rely only on property sales. They earn steady revenue from hotels, retail spaces, and land sales, essentially collecting a “private tax” within their towns.  To put it into perspective: Orascom’s land reserves—100 million square meters—are similar in size to Paris (about 105 square kilometers) or Barcelona (around 101 square kilometers). Of this, 60.2 million square meters remain undeveloped, making up about 40% of their total land bank and offering huge potential for growth in the years ahead. Instead of being concentrated in one location, these reserves are spread across seven countries, which helps reduce risks. If political or economic issues arise in one country, cities in other regions can help balance out the losses. The Bottom Line It’s dark outside now in my coworking space in Vietnam, and it’s time to wrap this up. I still believe Orascom Development Holding (ODH) is a company full of potential but somehow stuck in a frustrating cycle. Every few years, they face a crisis—a tragedy, a pandemic, or another black swan event. After the Arab Spring, they tried to diversify their portfolio and push the other destinations much more, but it takes decades to build an entire town from scratch - or at least to a size in which it is profitable. Keep in mind, the first few years of building the core infrastructure for a new town require a massive investment, and selling real estate is challenging when the town lacks basic amenities. However, once the difficult first decade is behind them, the profitability tends to grow exponentially. Now, there are several destinations that are self-sustaining or on the very brink of it. It's a very interesting point in time.  Despite owning billions in valuable assets and showing significant improvements, the market doesn’t seem to recognize their true worth—yet. Or perhaps that’s precisely the issue. Operating in markets like Egypt and Oman likely comes with a valuation discount, but how much of a discount is fair? That's up to the free market to decide.
Challenges such as currency devaluation, past setbacks, and a lack of investor confidence have kept the stock undervalued. These factors will likely continue to weigh on the company until it demonstrates consistent profits and sustainable, growing dividends. However, with a massive land bank, diversified projects, and steady progress in their core business, ODH has all the pieces in place to succeed. As their destinations mature, ODH will become more resilient to localized crises. More than ever, I believe we might be closer to a turnaround than most people think. If you enjoyed this research, please don’t hesitate to leave a comment, and feel free to challenge any part of my thesis or point out anything I might have missed.
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