Downgrade to Neutral as valuation turns rich
More troubles in 2018. We believe Aldrees’ earnings recovery will be delayed to 2019 on less support from the 4-yr Ma’aden contract which has been inconsistent (SAR30mn in 9M17 vs. earlier estimate of SAR60mn). As a result of its slow ramp-up, we discount the SAR597mn contract at 34% (20% previously), and reduce 2017-21e EBITDA estimates by 20% also on higher opex (expat fees and station licence fees, effective 2018 at SAR14mn) and unfavourable pricing of existing contracts. We cut our rating to Neutral from Overweight, post the stock price rally, on a 5% higher 12M TP of SAR31.5/share as we roll over our DCF at a 90bps lower WACC of 8.9%. Aldrees trades on a 2018e P/E of 24.9x vs. peers’ 23x.
Aldrees Petroleum & Transport is engaged in the selling of petroleum and transportation of goods. Co.'s objectives include retail and wholesale trading of fuel, lubricants, catering services and the transportation of goods. Co. also is engaged in the establishment of vehicle workshops and car washes, acquisition of land to construct buildings for sale and lease, and the construction, managing, operating and renting of take away centers for hot and cold beverages and food.
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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