Remain buyers despite market and cost pressures
Overweight despite macro headwinds. We reduce our TP by a marginal 2% on a 2016-20e EBITDA cut of 5% mainly due to slower sales/sqm growth (3% vs. 5% previously) and higher costs. But we remain buyers as Al-Othaim’s positive like-forlike growth is sustainable, in our view, thanks to its loyalty program and defensive sales portfolio, yet at a lower rate (guidance is 5% for 2017). 1H16 revenue growth outpaced the market (17% y-o-y vs. 2% y-o-y for Panda and Farm Superstores), fuelled by additions and higher store yields. On a 2017e P/E of 14.8x, Al-Othaim trades 14% below peers.
Abdullah Al Othaim Markets CompanySJSC Formerly known as Abdullah Al-Othaim Markets Company. Abdullah Al-Othaim Markets Company SJSC is a Saudi Arabia-based joint stock company engaged in the retail and wholesale trade of food stuff, in addition to constructing commercial malls and investing in their sales or leases. The Company undertakes wholesale trading in food supplies, fish, meat, cars and its spare parts, agricultural crops and livestock, and household equipment; constructing, managing, operating and maintaining of super markets, malls, and storage and cooling warehouses; cooked and non-cooked catering services; computer services, and operating and maintaining electrical and mechanical equipment. During the year 2011, the Company operated seven hypermarkets, 65 supermarkets, eight wholesale outlets and 26 corners.
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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