Turning a corner, but already priced for perfection
Short-term outperformance unlikely; reiterate Neutral. Edita’s pricing strategy, innovative new launches (97 SKUs in 1Q17 vs. 66 in 2015), quality management and wide network reach (21 DCs, 603 trucks) set it apart from peers. Yet, we argue, the market already prices the expected medium-term recovery (2018e P/E of 26x vs. MEA and global peers’ 19x and 24x) and, in our view, stepping in at current valuations is a play on faster volume recovery and M&A. We assume a 25% y-o-y drop in 2017 volume on 80% higher avg. price/t and near full recovery in volume by 2018. We raise our 12-month TP to EGP20.0/share (+50%) to reflect Edita’s price hikes.
Edita Food Industries is a Fast-Moving Consumer Goods (FMCG) company based in Egypt. Co. is engaged in developing, manufacturing and distributing products and brands such as Molto, TODO, Bake Rolz, Bake Stix, Mimix, HoHo's, Twinkies and Tiger Tail. Co. also acts as the sole regional distributor of several brands of imported sweeteners, olive oils, & pasta and maintains market activities in the Croissant, Cakes & Bread snacks categories in Egypt. Co. is predominately active in the Egyptian market but also distributes its products to consumers in more than 15 other markets in Middle East, Africa and Asia.
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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