Strategy to reap rewards; upgrade to Overweight
Positive growth outlook as Alhokair delivers. We upgrade our rating to Overweight from Neutral as Alhokair’s new strategy proved successful in 4QFY17 (Saudi gross margin +c10 ppt y-o-y to 26.7%). We believe the restructuring efforts, space and inventory optimisation plans should pay-off, improving margins and easing off the drop in store yields, despite Saudi’s spending pressures. We raise our TP by 30% to SAR45.5/share on 90 bps lower WACC and 12% higher FY18-22e EPS estimates on better margins, despite factoring in the impact of full Saudisation of malls (currently 1/3 of Alhokair’s salespeople are Saudis). Alhokair has a better growth profile (FY17-19e EPS CAGR of 25% vs. 5%) trading 3% below peers on FY18e P/E of 16.5x.
Fawaz Abdulaziz Alhokair Company SJSC Formerly known as Fawaz Abdulaziz Al Hokair And Company. Fawaz Abdulaziz Alhokair Co SJSC is a Saudi Arabia-based company. The Company's activities include the wholesale and retail trade in ready-made cloth for men, women and children, shoes, textiles, house and office furniture, perfumes, natural cosmetics, ornaments and beauty materials and their compounds and traditional jewelry; the wholesale and retail trading in sports wares and shoes and their complementary; the management and operation of optics centers, wholesale and retail trading in eye glasses and sun glasses, contact lenses, optical equipment and accessories; purchase of land and construction of building thereon for the purpose of running the Company's activities and business; the manufacture, wholesale and retail in Abayas, robes, scarfs and other women embroidered gowns; the wholesale and retail trading in gold and silver, among others.
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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