An attractive yield play despite turbulences; maintain rating on 8%-lower TP
Possible reasons why 2014 was a bad year. AIIC’s revenue, EBITDA, and net profit dropped by 4%, 23%, and 17% y-o-y in 9M14. Average prices of carpets and other floor coverings in Saudi Arabia were largely stable y-o-y over the same period (+1.7%), according to data from Saudi’s statistics bureau, implying that the decline in local sales—55% of 2013’s total sales—was broadly volume-based, a trend that management does not deny. Due to the lack of market information, it is unclear to us whether the causes of the decline in sale volumes are market- or company-specific. Against constant prices, cash costs-to-sales, which the company does not break down on a quarterly basis, grew by 470bps y-o-y. It appears to us that the resultant drop in the EBITDA margin was mostly caused by fixed costs relative to sales, most likely on higher wages, given the global polypropylene (PP) prices—the main input material—were flat y-o-y in 9M14 (+1.4%). On a separate note, management provides very little insight into why suppliers tightened terms (payable days down 27% y-o-y) and why collection days worsened during 9M14 (days up 17%), hinting though that there will be gradual improvement starting 4Q14.
Al Abdullatif Industrial Investment Company SJSC Formerly known as Al Alabdullatif Industrial. Al Abdullatif Industrial Investment Company SJSC is a Saudi Arabia-based company that specializes in the manufacture and distribution of carpets, blankets and rugs; the production of intermediate products, such as polyester, acrylic, polypropylene and nylon threads; carpet and moquette linings; colored dyes, and paper tubes. The Company operates in two segments: Production of carpet, rugs and other accessories, and Production of blankets. The Company's products include Tufted carpets, such as polyester tufted carpet, nylon tufted carpet, polypropylene tufted carpet, acrylic tufted carpet, 80/20 wool/nylon tufted carpet and grass tufted carpet; Woven carpets include polypropylene Billion Cubic Feet (BCF) carpet, polypropylene heatset carpet, acrylic carpet, viscose carpet and shaggy carpet, among others, and Non-woven carpets. The Company operates through its subsidiaries, and tufting and weaving plants.
CI Capital is a diversified financial services group and Egypt’s leading provider of leasing, microfinance, and investment banking products and services.
Through its headquarters in Cairo and presence in New York and Dubai, CI Capital offers a wide range of financial solutions to a diversified client base that include global and regional institutions and family offices, large corporates, SMEs, and high net worth and individual investors.
CI Capital leverages its full-fledged investment banking platform to provide market leading capital raising and M&A advisory, asset management, securities brokerage, custody and research. Through its subsidiary Corplease, CI Capital offers comprehensive leasing solutions, including finance and operating leases, and sale and leaseback, serving a wide range of corporate clients and SMEs. In addition, CI Capital offers microfinance lending through Egypt’s first licensed MFI, Reefy.
The Group has over 1,700 employees, led by a team of professionals who are among the most experienced in the industry, with complementary backgrounds and skill sets and a deep understanding of local market dynamics.
CI Capital has been recognized as the “Best Investment Bank in Egypt” by EMEA Finance for four years running from 2013-2016, and by Global Finance in 2014 and 2015.
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