Egypt Dairy Stocks | Play pure staples, Neutral on discretionary
Staples better on risk/reward. EGP weakness led to average retail price hikes of 40%-100% over the past 6M. Private-sector wage growth, based on anecdotal evidence, has come in much lower (15%-25%) than CPI (29.6% in Jan, food inflation at 37.2%) leading us to expect volume weakness, varying by product and the magnitude of price hikes. Cheese remains the most affordable source of protein, and contrary to popular view, packaged cheese is cheaper than loose cheese (not the case for milk and yoghurt). We reiterate our Overweight call on Obour Land, preferring it to Domty on: i) healthier cash cycle (48 DOH vs 108 DOH) driving a 2017e dividend yield of 4.6%, ii) valuation (2017e P/E of 12x vs. c19x for Domty and the sector) and iii) less exposure to discretionary demand (juice is 14% of Domty’s revenue).
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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