AVI (Hold, TP ZAR 100/share) - H1 17A result review: in-line result; HEPS growth at 7.6% y/y
- AVI reported H1 17A HEPS at ZAR 3.03/share, +7.6% y/y, within the guidance range of ZAR 3.01 to 3.07/share and in-line with ACe (ZAR 3.03/share)
- H1 17A sales at ZAR 7.1bn; 11.6% y/y (ACe: ZAR 7.1bn). Entyce division (c.28% of group revenue) reported solid 15% y/y sales growth (ACe: 12.7% y/y), however, Footwear and Apparel division (c.17% of group revenue) reported sales growth of only 4.3% y/y (ACe: 8.9% y/y). I&J (c. 16% of group revenue) reported 14% y/y sales growth (ACe: 10.5% y/y) on weaker ZAR and selling price increases despite weak volumes
- H1 17A EBIT at ZAR 1.4bn (ACe: ZAR 1.4bn); +8.1% y/y with a margin of 19.7%, down 64bps y/y. Gross margin contracted 147bps y/y with AVI yet to fully recover the input cost pressures despite price increases
AVI is a branded consumer products company. Co.'s business segments include: Entyce Beverages, which sells tea, coffee and creamer, primarily in South Africa and neighboring countries; Snackworks, which sales a range of sweet and savory biscuits and baked and fried potato and maize snacks; I&J, which catches fish in South African waters, and processes, markets and distributes seafood in local and international markets (mainly Europe and Australia); Fashion brands, which provides personal care and footwear and apparel offerings; Personal Care, which creates, manufactures and distributes cosmetic and toiletry products that range from mass market to bridge fragrances; and Footwear and Apparel.
Established in 2007, Arqaam Capital is a specialist emerging markets investment bank, bringing regional and international product offerings to the emerging markets. Arqaam Capital combines international best practice with expertise in the markets in which we operate. Our primary role is to provide financial intermediation and create investment opportunities for frontier and emerging markets investors looking to invest in their own markets and abroad, as well as international investors seeking opportunities in target frontier and emerging markets. Arqaam Capital is headquartered in the Dubai International Financial Centre (DIFC), with additional offices in Libya, Lebanon, Egypt, and South Africa.
Arqaam Capital's research platform provides the largest coverage footprint of MENA equities and one of the largest on the African continent with a total of 300 stocks under coverage. Arqaam Capital is ranked as one of the leading research providers in the region - a reflection of its broad coverage universe, its in-depth and high quality research, as well the compelling investment ideas that the team generates. The analysts closely analyze their sectors and issue in-depth company and sector research while the strategy team connects the micro with the macro, focusing on index analysis, macroeconomics and strategy research.
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