Utility business model warrants higher multiples
Reiterate OW at 7% higher TP of AED2.45/share. Tabreed added 64k RT1 in new capacity in 2016 (including a 11.5k RT plant acquisition in Abu Dhabi) and is guiding for another 60k RT in 2017-18, accreting 6% to current capacity. We raise new connections in the UAE to 4% of capacity p.a. (from 2% and vs. guidance of 5%) given 2016 additions. We note that connections need marginal capex vs. a greenfield and, thus, have a more pronounced positive impact on valuation. Tabreed is one of our high-conviction MENA ideas; the stock trades at 2017e P/E of 12.8x, 15% below EM utilities. This is unwarranted, in our view, as it boasts similar cash flow visibility, a strong growth outlook supported by a project pipeline of USD297bn in UAE and USD93bn in Qatar, and potential upside from a second MCB buyback.
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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