Another stifled year ahead, initiate with Neutral
Expect ST pressures, with 2018e EPS down c13% y-o-y. Farm Superstores, the largest grocery retailer in Saudi’s Eastern region (63% of revenue), is tapping into new areas in Saudi to diversify its footprint. But rising labour costs and high margin non-core segments (7% of revenue, 15% of GP), once key attributes, are at risk, being more exposed to affordability pressures, dragging margins. We believe the 4% discount to Al-Othaim on 2018e P/E of 17.7x is fair given Farm’s weaker LFL growth (-6% vs. flat for Al-Othaim in 1H17), inventory overhang and higher non-food sales (26% vs. 5%).
Saudi Marketing Company SJSC Formerly known as Saudi Marketing Company CJSC. Saudi Marketing Company SJSC (FARM Superstores) is a Saudi Arabia-based company engaged in the field of retail, trading, and importing business. The Company carries a range of products and items, such as grocery items and household items, among others. The Company operates a chain approximately of 47 supermarkets concentrated in the Eastern, Western, Southern and Northern provinces of Saudi Arabia, in the addition to over 17 mini markets serving residential compounds. The Company also has an overseas branch in Lebanon at Beirut mall.
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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