Low ticket fares extending to 2017, hold Neutral
Maintain AED1.40/share target price and Neutral rating. We cut our 2016-18 EPS forecasts (by 23% on average) to reflect the y-t-d c20% drop in yield (passenger revenue/RPK¹). Our higher long-term yield assumption (+2% p.a. in 2019 onwards) reflects the recent uptick in oil futures (2017-22e) and offsets the impact of lower 2016-18e earnings forecasts on our valuation. Our unchanged target price implies 2017e P/E of 14.5x, 29% above LCC² peers, justified in our view by an above-sectoraverage 2016-18e EPS CAGR of 16.4%. The 2016e DPS still offers an attractive yield of 6.2% vs. an industry average of 3.8% and the DFM average yield of 4.5% (2016).
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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