New strategy yielding fruit; initiate with Overweight
Shifting to a higher-margin model. After the Saudi Education Ministry’s 2010 decision to allow nationals to enrol in private schools, Al Khaleej shifted its growth strategy. Schools and educational projects (c50% of 2020e revenue, up from 28% in 2015a) will drive future growth as legacy training course activity slows (c20% of 2020e revenue vs. 40% in 2015a). We rate the move positively as the schooling business offers a sustained revenue stream and is highly underserved. Al Khaleej trades on a 2016e P/E of 16x, well below peers’ 20x with a near-50% discount on PEG ratio. Its 2017e P/E falls to 13.7x.
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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