Consumer business insufficient to fuel growth; downgrade to Neutral
Muted short-term growth outlook. We look for 2016-19e EPS CAGR of 4%, despite a growing higher-margin consumer business. We believe growth will be challenged by the phasing-out of flour subsidies on the bakery businesses (35% of volume) as of Jul-17, as well as higher utility costs in Abu Dhabi effective from Jan-17. We cut our rating to Neutral from Overweight on c20% lower TP to AED7.25/share. We lower our 2017-19 EPS forecasts by 12% p.a., reflecting the net effect of lower flour and animal feed profitability on subsidy removal, higher utility costs and acquisition of DWFC in Saudi. Agthia trades on 2018e P/E of 15x vs peers’ 16x. Aside from sealing an unforeseen M&A, we see no catalysts for the stock to rerate in the short-term.
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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