JAHEZ AB | A speedy delivery of growth; Initiate at OW
A leader in the making, with upside from new avenues. Jahez, Saudi’s second largest online food aggregator, is on track to lead the food delivery market, with a 45% share by 2024e vs. 30-35%, currently. This is feasible as young digital-receptive consumers sustain the shift to delivery. The model is highly scalable due to the involvement of technology, with contained overheads and capex to ramp up. Management is taking further steps to expand into related verticals, capitalising on its know-how and rising popularity of on-demand delivery. Jahez trades on a 2022e EV/S of 5.3x, ahead of loss-making peers’ 4.2x, justified by its superior growth outlook (2021-23e clean EPS CAGR of 45%).
Dynamic expansion cycle via network effect. Jahez links 1.9mn active users, c7.1k merchants, and 50.8k delivery partners, while offering lucrative benefits to attract and retain all. This helped grow the network, backed by higher brand awareness, uplifting aggregator market penetration (32% in 2025e vs. 25-30%, currently, and 18% in 2019). Its differentiated proposition allows for stickiness, where existing cohorts order more frequently, while new ones exhibit higher usage, confirming rising delivery reliance for QSRs.
Balancing growth with profitability. Jahez turned profitable ahead of global peers, thanks to its better cost passing ability, particularly for delivery fees. The elevated level of automation allows for centralising operations with minimal resources, ensuring scalability and better absorption. Thereby, we foresee an upward EBITDA margin trajectory, expanding c50bps p.a. to 11.9% by 2024e, as new loss-making ventures ramp up. These include PIK, a q-commerce app, launched in 2021, as well as Logi to serve its logistic needs, and others at a later stage. Jahez further acquired 60% of Co Kitchens in 2020 to develop a network of dark kitchens (currently runs five).
Cash rich to fund ambitious plans. The spike in capex should be easily accommodated for, given the cash generative nature of the business. This is further amplified by SAR758mn IPO proceeds (SAR81/share; 6% of our TP and 6x of 2021 EBITDA), to fund Jahez app’s expansion in Saudi and regionally, new ventures, marketing and R&D spend, and M&As (currently running due diligence to acquire The Chefz app).
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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