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US$6.00bn
Market cap
44.7%
Free float
US$4.800mn
Avg. daily volume
Research Department Khalid Alruwaigh, Investment Analyst Tel +966 1 211 9310, alruwaighka@alrajhi-capital.com
Neutral
Overweight
We believe that the food industry will continue to grow strongly. Almarai has a very strong position in the GCC dairy market. We believe that Almarai will continue to enter new segments through start-ups or acquisitions to maintain its outstanding growth. Implications Almarai is our preferred stock in the agriculture & food sector. Almarai is performing well operationally and offers growth in the near term at a reasonable valuation. We expect high transparency to continue to support Almarais share price, and think it will find favour with international investors if the Saudi stock market is fully opened up. Performance
Price Close MAV10 MAV50 Relative to SASEIDX (RHS)
Vol
RSI10
07/09
10/09
01/10
04/10
Source: Bloomberg
Earnings
Period End (SAR) 12/09A 12/10E 12/11E 12/12E Revenue (SARmn) Revenue Growth EBITDA (SARmn) EBITDA Growth EPS EPS Growth 5,869 1,732 9.78 6,906 2,071 11.29 7,941 2,243 13.19 8,974 2,534 15.07 16.7% 17.7% 15.0% 13.0% 19.5% 19.5% 8.3% 13.0%
Valuation
P/E (x)
23
21
19
17
15 13 11 9 01/07 01/08 01/09
Disclosures Please refer to the important disclosures at the back of this report. Powered by Enhanced Datasystems EFA Platform
Almarai Company
Income Statement (SARmn) Revenue Cost of Goods Sold Gross Profit Government Charges S.G. & A. Costs Operating EBIT Cash Operating Costs EBITDA Depreciation and Amortisation Operating Profit Net financing income/(costs) Forex and Related Gains Provisions Other Income Other Expenses Net Profit Before Taxes Taxes Minority Interests Net profit available to shareholders Dividends Transfer to Capital Reserve
12/08A 5,030 -2,963 2,067 -938 1,129 -3,580 1,450 -321 1,129 -125 0 0 0 0 1,003 -25 -1 978 -380 0
12/08A
12/09A 5,869 -3,503 2,366 -1,087 1,279 -4,136 1,732 -454 1,279 -151 0 0 0 0 1,128 -29 -3 1,095 -460 0
12/09A 115.0 13.86 9.78 4.00
12/09A 16.7% 14.5% 19.5% 13.3% 12.0% 9.0%
12/09A 40.3% 29.5% 21.8% 19.2% 18.7%
12/10E 6,906 -4,136 2,769 -1,273 1,497 -4,835 2,071 -574 1,497 -135 0 0 0 -2 1,360 -32 -29 1,299 -460 0
12/10E 115.0 16.54 11.29 4.00
12/10E 17.7% 17.1% 19.5% 17.0% 18.6% 15.5%
12/10E 40.1% 30.0% 21.7% 19.7% 18.8%
12/11E 7,941 -4,765 3,177 -1,429 1,747 -5,699 2,243 -496 1,747 -155 0 0 0 -2 1,590 -39 -34 1,517 -575 0
12/11E 115.0 17.80 13.19 5.00
12/11E 15.0% 14.7% 8.3% 16.7% 16.8% 16.8%
12/11E 40.0% 28.2% 22.0% 20.0% 19.1%
12/12E 8,974 -5,384 3,590 -1,615 1,974 -6,440 2,534 -560 1,974 -156 0 0 0 -2 1,816 -44 -39 1,733 -719 0
12/12E 115.0 20.28 15.07 6.25
12/12E 13.0% 13.0% 13.0% 13.0% 14.2% 14.2%
12/12E 40.0% 28.2% 22.0% 20.2% 19.3%
Adjusted Shares Out (mn) CFPS (SAR) EPS (SAR) DPS (SAR)
Growth Revenue Growth Gross Profit Growth EBITDA Growth Operating Profit Growth Net Profit Growth EPS Growth
Margins Gross profit margin EBITDA margin Operating Margin Pretax profit margin Net profit margin
Other Ratios ROCE ROIC ROE Effective Tax Rate Capex/Sales Dividend Payout Ratio
Valuation Measures P/E (x) P/CF (x) P/B (x) EV/Sales (x) EV/EBITDA (x) EV/EBIT (x) EV/IC (x) Dividend Yield Source: Company data, Al Rajhi Capital
Disclosures Please refer to the important disclosures at the back of this report.
Almarai Company
Balance Sheet (SARmn) Cash and Cash Equivalents Current Receivables Inventories Other current assets Total Current Assets Fixed Assets Investments Goodwill Other Intangible Assets Total Other Assets Total Non-current Assets Total Assets Short Term Debt Trade Payables Dividends Payable Other Current Liabilities Total Current Liabilities Long-Term Debt Other LT Payables Provisions Total Non-current Liabilities Minority interests Paid-up share capital Total Reserves Total Shareholders' Equity Total Equity Total Liabilities & Shareholders' Equity
Ratios Net Debt (SARmn) Net Debt/EBITDA (x) Net Debt to Equity EBITDA Interest Cover (x) BVPS (SAR)
12/08A 247 294 1,097 107 1,760 5,343 489 549 40 6,422 8,181 511 1,266 3,133 151 3,284 14 1,090 2,527 3,617 3,631 8,181
12/08A 3,391 2.34 93.4% 11.6 33.18
12/09A 508 455 1,219 2,182 7,049 963 793 8,805 10,987 396 1,440 3,981 166 4,147 17 1,150 4,233 5,383 5,400 10,987
12/09A 3,869 2.23 71.7% 11.5 46.81
12/10E 580 707 1,273 2,560 8,381 947 793 10,122 12,682 410 1,430 4,846 172 5,018 46 1,150 5,039 6,189 6,235 12,682
12/10E 4,675 2.26 75.0% 15.3 53.82
12/11E 800 794 1,429 3,024 9,474 947 793 11,215 14,238 410 115 1,658 5,197 172 5,370 80 1,150 5,981 7,131 7,211 14,238
12/11E 4,807 2.14 66.7% 14.5 62.01
12/12E 1,056 897 1,615 3,568 10,260 947 793 12,001 15,569 410 259 1,936 5,197 172 5,370 119 1,150 6,995 8,145 8,264 15,569
12/12E 4,551 1.80 55.1% 16.2 70.83
Cashflow Statement (SARmn) Net Income before Tax & Minority Interest Depreciation & Amortisation Decrease in Working Capital Other Operating Cashflow Cashflow from Operations Capital Expenditure New Investments Others Cashflow from investing activities Net Operating Cashflow Dividends paid to ordinary shareholders Proceeds from issue of shares Effects of Exchange Rates on Cash Other Financing Cashflow Cashflow from financing activities Total cash generated Cash at beginning of period Implied cash at end of year
12/08A 321 (296) 1,026 1,051 (1,572) (1,572) (521) (271) 8 665 144 138 282
12/09A 454 163 1,165 1,782 (1,227) (484) (1,711) 71 (381) 9 170 241 247 487
12/10E 574 (349) 1,347 1,572 (1,881) (1,881) (309) (460) (31) 388 79 508 586
12/11E 496 (130) 1,551 1,917 (1,588) (1,588) 328 (460) (108) 220 580 800
12/12E 560 (155) 1,772 2,177 (1,346) (1,346) 831 (575) (575) 256 800 1,056
12/08A 31.3%
12/09A 20.9%
12/10E 27.2%
12/11E 20.0%
12/12E 15.0%
Disclosures Please refer to the important disclosures at the back of this report.
Almarai Company
Additional disclosures
1. Explanation of Al Rajhi Capitals rating system
Al Rajhi Capital uses a three-tier rating system based on absolute upside or downside potential for all stocks under its coverage except financial stocks and those few other companies not compliant with Islamic Shariah law: "Overweight": Our target price is more than 15% above the current share price, and we expect the share price to reach the target on a 6-9 month time horizon. "Neutral": We expect the share price to settle at a level between 5% below the current share price and 15% above the current share price on a 6-9 month time horizon. "Underweight": Our target price is more than 5% below the current share price, and we expect the share price to reach the target on a 6-9 month time horizon.
2.
Definitions
"Time horizon": Our analysts make recommendations on a 6-9 month time horizon. In other words, they expect a given stock to reach their target price within that time. "Fair value": We estimate fair value per share for every stock we cover. This is normally based on widely accepted methods appropriate to the stock or sector under consideration, e.g. DCF (discounted cash flow) or SoTP (sum of the parts) analysis. "Target price": This may be identical to estimated fair value per share, but is not necessarily the same. There may be very good reasons why a share price is unlikely to reach fair value within our time horizon. In such a case we set a target price which differs from estimated fair value per share, and explain our reasons for doing so. Please note that the achievement of any price target may be impeded by general market and economic trends and other external factors, or if a companys profits or operating performance exceed or fall short of our expectations.
Contact us
Dr. Saleh Alsuhaibani Head of Research Tel : +966 1 2119434 alsuhaibanis@alrajhi-capital.com Al Rajhi Capital Research Department Head Office, King Fahad Road P.O. Box 5561 Riyadh 11432 Kingdom of Saudi Arabia Email: research@alrajhi-capital.com Al Rajhi Capital, a subsidiary of Al Rajhi Bank, is licensed by the Saudi Arabian Capital Market Authority, License No. 07068/37.
Disclosures Please refer to the important disclosures at the back of this report.