Almarai Better margin trajectory - Al Rajhi Capital
Almarai Company
Food-Diversified – Industrial ALMARAI AB: Saudi Arabia 20 July 2016
Rating
NEUTRAL
Target price
SAR59.0 (4.7% upside)
Current price
SAR56.4
Senior Research Analyst Nivedan Reddy Patlolla, CFA Tel +966 1 211 9423, [email protected] Key themes & implications Almarai reported strong margin management in Q2 2016, showing resilience of the company’s core business to higher energy/ utility prices and lower subsidy. Post Q2 results, we upgrade our margin estimates over the medium term leading to higher net profit estimates. Based on our latest estimates we revised our target price to SAR59 per share. Share information Market cap (SAR/US$)
45.10bn / 12.03bn
52-week range
41.57 - 72.44
Daily avg volume (US$)
mn
Shares outstanding
800.0mn
Free float (est)
36%
Performance
1M
3M
12M
Absolute
3.9%
-0.7%
-19.8%
Relative to index
1.8%
-3.0%
8.7%
Almarai Better margin trajectory Almarai’s Q2 net profit was above our and consensus estimates led by higher than expected gross margin which expanded 150 bps YoY in an environment of higher energy/ utility prices and lower subsidy, mainly due to lower input costs (efficient purchasing and hedging of raw materials) and improvement in operational efficiency. Management believes the actual impact from revision in energy/ utility prices will be lower than the initially estimated SAR 300mn (including the indirect impact from suppliers) and the program aimed at improving efficiency (company working on a total of 17 initiatives) has ample headroom to lower costs. We factor in higher gross margin over the medium to long term, the benefit of which will partially get negated by higher interest outgo due to rising SAIBOR, leading to 4%/ 8% increase in our FY17e/ FY18e net profit estimates. We raise our target price to SAR59 per share (SAR55 previously), however rate the stock as Neutral due to limited upside.
Major Shareholder: Savola Al-Azizia United Co
36.5%
Al-Saud Sultan Mohamed
28.6%
Revenue momentum to keep pace: Start of Bakery unit at Hail, new product launches, traction in export sales in Long life Milk, Juice segments and overall investments in distribution expansion will drive revenue growth going forward.
Poultry segment performance to improve: Poultry segment was impacted in Q1 2016 due to dumping of frozen products especially from Brazil. Management expects the performance to improve as competitive intensity is subsiding post the recent appreciation of Brazilian Real. Further, the mortality rates have been trending down.
Outlook for 2H 2016: Profitability in 2H 2016 may come under pressure due to the full impact of higher forage costs (SAR200mn according to initial estimates by the company), as higher cost inventory will be put to use.
Valuation: We continue to value Almarai at weighted average of DCF and relative valuation (P/E) methodologies. Based on our revised estimates post the management earnings call, our new target price stands at SAR59 per share (SAR55 previously), implying 4.7% upside. We rate the stock as Neutral. Sharp currency depreciation in Egypt (currency translation impact) and Brazil (impact on Poultry segment) are risks to our estimates.
Valuation 12/14A
12/15A
12/16E
12/17E
P/E (x)
26.9
23.5
23.2
20.3
P/B (x)
4.1
3.7
3.4
3.2
EV/EBITDA (x)
16.5
14.7
13.9
12.6
Dividend Yield
1.3%
2.0%
3.2%
3.5%
Source: Company data, Al Rajhi Capital
Performance Price Close
Relative to TADAWUL FF (RHS)
RSI10
78.0 73.0 68.0 63.0 58.0 53.0 48.0 43.0 38.0 70 30 -10 07/15
122.0 118.9 115.8 112.6 109.5 106.4 103.3 100.1 97.0
10/15
01/16
04/16
Source: Bloomberg, Company data, Al Rajhi Capital
Company summary
Period End (SAR)
12/13A
12/14A
12/15A
12/16E
12/17E
Almarai is the largest integrated dairy foods company in GCC, with a reputation for quality among the Gulf states in which it operates.
Revenue (mn)
11,219
12,606
13,795
15,248
16,771
Revenue Growth Gross profit margin EBITDA margin
13.5% 35.3% 27.9%
12.4% 36.4% 27.4%
9.4% 38.3% 27.9%
10.5% 37.8% 27.0%
10.0% 37.3% 28.1%
Net profit margin EPS EPS Growth ROE ROCE Capex/Sales
13.4% 1.88 4.3% 17.0% 9.4% 23.9%
13.3% 2.09 11.5% 15.9% 10.3% 21.3%
13.9% 2.39 14.4% 16.7% 10.3% 28.8%
12.8% 2.43 1.5% 15.4% 10.0% 22.5%
13.2% 2.78 14.2% 16.4% 10.6% 22.5%
Source: Company data, Al Rajhi Capital; Note: EPS for previous years also adjusted for 800mn outstanding shares, post the bonus issue in Q2 2016
Please see penultimate page for additional important disclosures. Al Rajhi Capital (Al Rajhi) is a foreign broker-dealer unregistered in the USA. Al Rajhi research is prepared by research analysts who are not registered in the USA. Al Rajhi research is distributed in the USA pursuant to Rule 15a-6 of the Securities Exchange Act of 1934 solely by Rosenblatt Securities, an SEC registered and FINRA-member broker-dealer.
Almarai Company
Food-Diversified – Industrial 20 July 2016
Income Statement (SARmn)
12/13A
12/14A
12/15A
12/16E
12/17E
Revenue
11,219
12,606
13,795
15,248
16,771
Cost of Goods Sold
(7,256)
(8,013)
(8,511)
(9,482)
(10,519)
3,963
4,593
5,283
5,766
6,252
S.G. & A. Costs
(2,166)
(2,595)
(3,021)
(3,399)
(3,516)
Operating EBIT
1,797
1,998
2,262
2,367
2,736
(8,092)
(9,154)
(9,945)
(11,138)
(12,052)
3,127
3,452
3,850
4,110
4,718
(1,331)
(1,454)
(1,588)
(1,743)
(1,983)
1,797
1,998
2,262
2,367
2,736
Gross Profit Government Charges
Cash Operating Costs EBITDA Depreciation and Amortisation Operating Profit Net financing income/(costs)
(254)
(216)
(267)
(335)
-
-
-
Provisions
-
-
-
-
-
Other Income
-
-
-
-
-
Other Expenses
-
(27)
Net Profit Before Taxes Taxes
1,542
Dividends
1,864
(44) 2,001
-
(50) 2,315
(42)
(71)
(66)
(82)
2
(10)
117
25
1,916
1,945
2,221
Minority Interests Net profit available to shareholders
1,755
(131)
14
(370)
Forex and Related Gains
1,502
(1,440)
(1,600)
-
-
-
-
12/13A
12/14A
12/15A
12/16E
12/17E
800.0
800.0
800.0
800.0
800.0
3.54
3.92
4.23
4.58
5.26
EPS (SAR)
1.878
2.093
2.395
2.431
2.776
DPS (SAR)
0.750
0.750
1.125
1.800
2.000
Adjusted Shares Out (mn) CFPS (SAR)
Growth
(600)
(900)
(2)
-
Transfer to Capital Reserve
(600)
1,674
(93)
12/13A
12/14A
12/15A
12/16E
12/17E
Revenue Growth
13.5%
12.4%
9.4%
10.5%
10.0%
Gross Profit Growth
12.9%
15.9%
15.0%
9.1%
8.4%
EBITDA Growth
14.2%
10.4%
11.5%
6.8%
14.8%
Operating Profit Growth
7.4%
11.2%
13.2%
4.6%
15.6%
Net Profit Growth
4.3%
11.5%
14.4%
1.5%
14.2%
EPS Growth
4.3%
11.5%
14.4%
1.5%
14.2%
Margins
12/13A
12/14A
12/15A
12/16E
12/17E
Gross profit margin
35.3%
36.4%
38.3%
37.8%
37.3%
EBITDA margin
27.9%
27.4%
27.9%
27.0%
28.1%
Operating Margin
16.0%
15.8%
16.4%
15.5%
16.3%
Pretax profit margin
13.7%
13.9%
13.5%
13.1%
13.8%
Net profit margin
13.4%
13.3%
13.9%
12.8%
13.2%
Other Ratios
12/13A
12/14A
12/15A
12/16E
12/17E
ROCE
9.4%
10.3%
10.3%
10.0%
10.6%
ROIC
10.8%
10.4%
10.9%
10.4%
11.0%
ROE
17.0%
15.9%
16.7%
15.4%
16.4%
2.7%
4.0%
3.5%
4.1%
4.0%
Capex/Sales
23.9%
21.3%
28.8%
22.5%
22.5%
Dividend Payout Ratio
39.9%
35.8%
47.0%
74.0%
72.0%
Valuation Measures
Effective Tax Rate
12/13A
12/14A
12/15A
12/16E
12/17E
P/E (x)
30.0
26.9
23.5
23.2
20.3
P/CF (x)
15.9
14.4
13.3
12.3
10.7
P/B (x)
4.4
4.1
3.7
3.4
3.2
EV/Sales (x)
5.0
4.5
4.1
3.7
3.5
EV/EBITDA (x)
17.9
16.5
14.7
13.9
12.6
EV/EBIT (x)
31.2
28.5
25.0
24.1
21.8
3.0
2.8
2.6
2.4
2.2
1.3%
1.3%
2.0%
3.2%
3.5%
EV/IC (x) Dividend Yield Source: Company data, Al Rajhi Capital
Disclosures Please refer to the important disclosures at the back of this report.
2
Almarai Company
Food-Diversified – Industrial 20 July 2016
Balance Sheet (SARmn)
12/15A
12/16E
1,811
797
2,039
1,482
331
992
1,346
1,281
1,265
1,733
2,545
2,769
2,836
2,797
3,690
14
1
3
28
28
5,348
4,912
6,155
5,551
5,760
16,020
17,246
19,924
22,530
24,321
479
325
198
186
186
1,310
1,350
1,009
993
993
12
2
11
13
13
110
114
74
63
63
Total Non-current Assets
17,932
19,037
21,216
23,786
25,577
Total Assets
23,280
23,949
27,371
29,337
31,337
1,683
1,821
2,039
1,796
1,796
-
-
-
-
-
Total Current Liabilities
3,720
4,043
4,807
4,947
4,858
Long-Term Debt
8,289
7,737
9,343
10,038
11,343
Cash and Cash Equivalents Current Receivables Inventories Other current assets Total Current Assets Fixed Assets Investments Goodwill Other Intangible Assets Total Other Assets
Short Term Debt
12/13A
12/14A
12/17E
Trade Payables Dividends Payable Other Current Liabilities
Other LT Payables
-
-
-
-
-
Provisions
506
538
603
682
682
8,795
8,275
9,946
10,719
12,025
622
744
560
501
503
6,000
6,000
6,000
8,000
8,000
Total Non-current Liabilities Minority interests Paid-up share capital Total Reserves
4,142
4,887
6,058
5,170
5,951
Total Shareholders' Equity
10,142
10,887
12,058
13,170
13,951
Total Equity
10,764
11,631
12,618
13,671
14,454
Total Liabilities & Shareholders' Equity
23,280
23,949
27,371
29,337
31,337
Ratios
12/13A
12/14A
12/15A
12/16E
12/17E
8,147
8,760
9,340
10,329
12,786
Net Debt (SARmn) Net Debt/EBITDA (x) Net Debt to Equity EBITDA Interest Cover (x) BVPS (SAR)
Cashflow Statement (SARmn)
2.61
2.54
2.43
2.51
2.71
75.7%
75.3%
74.0%
75.6%
88.5%
12.3
16.0
14.4
12.3
12.7
12.68
13.61
15.07
16.46
17.44
12/13A
12/14A
12/15A
12/16E
12/17E
Net Income before Tax & Minority Interest
1,542
1,755
1,864
2,001
2,315
Depreciation & Amortisation
1,331
1,454
1,588
1,743
1,016
431
Decrease in Working Capital Other Operating Cashflow Cashflow from Operations Capital Expenditure
(603)
(294)
(82)
1,983 (1,449)
356
365
413
2,626
3,279
4,881
4,094
2,756
(93)
(2,677)
(2,690)
(3,968)
(3,431)
(3,773)
New Investments
(235)
55
(18)
-
-
Others
(391)
(479)
(423)
-
-
(3,302)
(3,115)
(4,409)
(3,431)
(3,773)
Cashflow from investing activities Net Operating Cashflow
(676)
165
472
663
(1,017)
Dividends paid to ordinary shareholders
(499)
(598)
(599)
(900)
(1,440)
Proceeds from issue of shares Increase in Loans Effects of Exchange Rates on Cash
-
-
1,329
1,837
500
1,500
(16)
(13)
-
Other Financing Cashflow
1,245
(179)
(507)
2,000
Cashflow from financing activities
2,070
(1,098)
719
1,600
(134)
Total cash generated
1,393
(933)
1,191
2,263
(1,151)
Cash at beginning of period Implied cash at end of year
Ratios Capex/Sales Source: Company data, Al Rajhi Capital
Disclosures Please refer to the important disclosures at the back of this report.
(5)
(305)
-
(194)
417
1,811
797
2,039
1,482
1,811
877
1,987
4,302
331
12/13A
12/14A
12/15A
12/16E
12/17E
23.9%
21.3%
28.8%
22.5%
22.5%
3
Almarai Company
Food-Diversified – Industrial 20 July 2016
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4
Almarai Company
Food-Diversified – Industrial 20 July 2016
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Disclosures Please refer to the important disclosures at the back of this report.
5
Food-Diversified – Industrial ALMARAI AB: Saudi Arabia 20 July 2016
Rating
NEUTRAL
Target price
SAR59.0 (4.7% upside)
Current price
SAR56.4
Senior Research Analyst Nivedan Reddy Patlolla, CFA Tel +966 1 211 9423, [email protected] Key themes & implications Almarai reported strong margin management in Q2 2016, showing resilience of the company’s core business to higher energy/ utility prices and lower subsidy. Post Q2 results, we upgrade our margin estimates over the medium term leading to higher net profit estimates. Based on our latest estimates we revised our target price to SAR59 per share. Share information Market cap (SAR/US$)
45.10bn / 12.03bn
52-week range
41.57 - 72.44
Daily avg volume (US$)
mn
Shares outstanding
800.0mn
Free float (est)
36%
Performance
1M
3M
12M
Absolute
3.9%
-0.7%
-19.8%
Relative to index
1.8%
-3.0%
8.7%
Almarai Better margin trajectory Almarai’s Q2 net profit was above our and consensus estimates led by higher than expected gross margin which expanded 150 bps YoY in an environment of higher energy/ utility prices and lower subsidy, mainly due to lower input costs (efficient purchasing and hedging of raw materials) and improvement in operational efficiency. Management believes the actual impact from revision in energy/ utility prices will be lower than the initially estimated SAR 300mn (including the indirect impact from suppliers) and the program aimed at improving efficiency (company working on a total of 17 initiatives) has ample headroom to lower costs. We factor in higher gross margin over the medium to long term, the benefit of which will partially get negated by higher interest outgo due to rising SAIBOR, leading to 4%/ 8% increase in our FY17e/ FY18e net profit estimates. We raise our target price to SAR59 per share (SAR55 previously), however rate the stock as Neutral due to limited upside.
Major Shareholder: Savola Al-Azizia United Co
36.5%
Al-Saud Sultan Mohamed
28.6%
Revenue momentum to keep pace: Start of Bakery unit at Hail, new product launches, traction in export sales in Long life Milk, Juice segments and overall investments in distribution expansion will drive revenue growth going forward.
Poultry segment performance to improve: Poultry segment was impacted in Q1 2016 due to dumping of frozen products especially from Brazil. Management expects the performance to improve as competitive intensity is subsiding post the recent appreciation of Brazilian Real. Further, the mortality rates have been trending down.
Outlook for 2H 2016: Profitability in 2H 2016 may come under pressure due to the full impact of higher forage costs (SAR200mn according to initial estimates by the company), as higher cost inventory will be put to use.
Valuation: We continue to value Almarai at weighted average of DCF and relative valuation (P/E) methodologies. Based on our revised estimates post the management earnings call, our new target price stands at SAR59 per share (SAR55 previously), implying 4.7% upside. We rate the stock as Neutral. Sharp currency depreciation in Egypt (currency translation impact) and Brazil (impact on Poultry segment) are risks to our estimates.
Valuation 12/14A
12/15A
12/16E
12/17E
P/E (x)
26.9
23.5
23.2
20.3
P/B (x)
4.1
3.7
3.4
3.2
EV/EBITDA (x)
16.5
14.7
13.9
12.6
Dividend Yield
1.3%
2.0%
3.2%
3.5%
Source: Company data, Al Rajhi Capital
Performance Price Close
Relative to TADAWUL FF (RHS)
RSI10
78.0 73.0 68.0 63.0 58.0 53.0 48.0 43.0 38.0 70 30 -10 07/15
122.0 118.9 115.8 112.6 109.5 106.4 103.3 100.1 97.0
10/15
01/16
04/16
Source: Bloomberg, Company data, Al Rajhi Capital
Company summary
Period End (SAR)
12/13A
12/14A
12/15A
12/16E
12/17E
Almarai is the largest integrated dairy foods company in GCC, with a reputation for quality among the Gulf states in which it operates.
Revenue (mn)
11,219
12,606
13,795
15,248
16,771
Revenue Growth Gross profit margin EBITDA margin
13.5% 35.3% 27.9%
12.4% 36.4% 27.4%
9.4% 38.3% 27.9%
10.5% 37.8% 27.0%
10.0% 37.3% 28.1%
Net profit margin EPS EPS Growth ROE ROCE Capex/Sales
13.4% 1.88 4.3% 17.0% 9.4% 23.9%
13.3% 2.09 11.5% 15.9% 10.3% 21.3%
13.9% 2.39 14.4% 16.7% 10.3% 28.8%
12.8% 2.43 1.5% 15.4% 10.0% 22.5%
13.2% 2.78 14.2% 16.4% 10.6% 22.5%
Source: Company data, Al Rajhi Capital; Note: EPS for previous years also adjusted for 800mn outstanding shares, post the bonus issue in Q2 2016
Please see penultimate page for additional important disclosures. Al Rajhi Capital (Al Rajhi) is a foreign broker-dealer unregistered in the USA. Al Rajhi research is prepared by research analysts who are not registered in the USA. Al Rajhi research is distributed in the USA pursuant to Rule 15a-6 of the Securities Exchange Act of 1934 solely by Rosenblatt Securities, an SEC registered and FINRA-member broker-dealer.
Almarai Company
Food-Diversified – Industrial 20 July 2016
Income Statement (SARmn)
12/13A
12/14A
12/15A
12/16E
12/17E
Revenue
11,219
12,606
13,795
15,248
16,771
Cost of Goods Sold
(7,256)
(8,013)
(8,511)
(9,482)
(10,519)
3,963
4,593
5,283
5,766
6,252
S.G. & A. Costs
(2,166)
(2,595)
(3,021)
(3,399)
(3,516)
Operating EBIT
1,797
1,998
2,262
2,367
2,736
(8,092)
(9,154)
(9,945)
(11,138)
(12,052)
3,127
3,452
3,850
4,110
4,718
(1,331)
(1,454)
(1,588)
(1,743)
(1,983)
1,797
1,998
2,262
2,367
2,736
Gross Profit Government Charges
Cash Operating Costs EBITDA Depreciation and Amortisation Operating Profit Net financing income/(costs)
(254)
(216)
(267)
(335)
-
-
-
Provisions
-
-
-
-
-
Other Income
-
-
-
-
-
Other Expenses
-
(27)
Net Profit Before Taxes Taxes
1,542
Dividends
1,864
(44) 2,001
-
(50) 2,315
(42)
(71)
(66)
(82)
2
(10)
117
25
1,916
1,945
2,221
Minority Interests Net profit available to shareholders
1,755
(131)
14
(370)
Forex and Related Gains
1,502
(1,440)
(1,600)
-
-
-
-
12/13A
12/14A
12/15A
12/16E
12/17E
800.0
800.0
800.0
800.0
800.0
3.54
3.92
4.23
4.58
5.26
EPS (SAR)
1.878
2.093
2.395
2.431
2.776
DPS (SAR)
0.750
0.750
1.125
1.800
2.000
Adjusted Shares Out (mn) CFPS (SAR)
Growth
(600)
(900)
(2)
-
Transfer to Capital Reserve
(600)
1,674
(93)
12/13A
12/14A
12/15A
12/16E
12/17E
Revenue Growth
13.5%
12.4%
9.4%
10.5%
10.0%
Gross Profit Growth
12.9%
15.9%
15.0%
9.1%
8.4%
EBITDA Growth
14.2%
10.4%
11.5%
6.8%
14.8%
Operating Profit Growth
7.4%
11.2%
13.2%
4.6%
15.6%
Net Profit Growth
4.3%
11.5%
14.4%
1.5%
14.2%
EPS Growth
4.3%
11.5%
14.4%
1.5%
14.2%
Margins
12/13A
12/14A
12/15A
12/16E
12/17E
Gross profit margin
35.3%
36.4%
38.3%
37.8%
37.3%
EBITDA margin
27.9%
27.4%
27.9%
27.0%
28.1%
Operating Margin
16.0%
15.8%
16.4%
15.5%
16.3%
Pretax profit margin
13.7%
13.9%
13.5%
13.1%
13.8%
Net profit margin
13.4%
13.3%
13.9%
12.8%
13.2%
Other Ratios
12/13A
12/14A
12/15A
12/16E
12/17E
ROCE
9.4%
10.3%
10.3%
10.0%
10.6%
ROIC
10.8%
10.4%
10.9%
10.4%
11.0%
ROE
17.0%
15.9%
16.7%
15.4%
16.4%
2.7%
4.0%
3.5%
4.1%
4.0%
Capex/Sales
23.9%
21.3%
28.8%
22.5%
22.5%
Dividend Payout Ratio
39.9%
35.8%
47.0%
74.0%
72.0%
Valuation Measures
Effective Tax Rate
12/13A
12/14A
12/15A
12/16E
12/17E
P/E (x)
30.0
26.9
23.5
23.2
20.3
P/CF (x)
15.9
14.4
13.3
12.3
10.7
P/B (x)
4.4
4.1
3.7
3.4
3.2
EV/Sales (x)
5.0
4.5
4.1
3.7
3.5
EV/EBITDA (x)
17.9
16.5
14.7
13.9
12.6
EV/EBIT (x)
31.2
28.5
25.0
24.1
21.8
3.0
2.8
2.6
2.4
2.2
1.3%
1.3%
2.0%
3.2%
3.5%
EV/IC (x) Dividend Yield Source: Company data, Al Rajhi Capital
Disclosures Please refer to the important disclosures at the back of this report.
2
Almarai Company
Food-Diversified – Industrial 20 July 2016
Balance Sheet (SARmn)
12/15A
12/16E
1,811
797
2,039
1,482
331
992
1,346
1,281
1,265
1,733
2,545
2,769
2,836
2,797
3,690
14
1
3
28
28
5,348
4,912
6,155
5,551
5,760
16,020
17,246
19,924
22,530
24,321
479
325
198
186
186
1,310
1,350
1,009
993
993
12
2
11
13
13
110
114
74
63
63
Total Non-current Assets
17,932
19,037
21,216
23,786
25,577
Total Assets
23,280
23,949
27,371
29,337
31,337
1,683
1,821
2,039
1,796
1,796
-
-
-
-
-
Total Current Liabilities
3,720
4,043
4,807
4,947
4,858
Long-Term Debt
8,289
7,737
9,343
10,038
11,343
Cash and Cash Equivalents Current Receivables Inventories Other current assets Total Current Assets Fixed Assets Investments Goodwill Other Intangible Assets Total Other Assets
Short Term Debt
12/13A
12/14A
12/17E
Trade Payables Dividends Payable Other Current Liabilities
Other LT Payables
-
-
-
-
-
Provisions
506
538
603
682
682
8,795
8,275
9,946
10,719
12,025
622
744
560
501
503
6,000
6,000
6,000
8,000
8,000
Total Non-current Liabilities Minority interests Paid-up share capital Total Reserves
4,142
4,887
6,058
5,170
5,951
Total Shareholders' Equity
10,142
10,887
12,058
13,170
13,951
Total Equity
10,764
11,631
12,618
13,671
14,454
Total Liabilities & Shareholders' Equity
23,280
23,949
27,371
29,337
31,337
Ratios
12/13A
12/14A
12/15A
12/16E
12/17E
8,147
8,760
9,340
10,329
12,786
Net Debt (SARmn) Net Debt/EBITDA (x) Net Debt to Equity EBITDA Interest Cover (x) BVPS (SAR)
Cashflow Statement (SARmn)
2.61
2.54
2.43
2.51
2.71
75.7%
75.3%
74.0%
75.6%
88.5%
12.3
16.0
14.4
12.3
12.7
12.68
13.61
15.07
16.46
17.44
12/13A
12/14A
12/15A
12/16E
12/17E
Net Income before Tax & Minority Interest
1,542
1,755
1,864
2,001
2,315
Depreciation & Amortisation
1,331
1,454
1,588
1,743
1,016
431
Decrease in Working Capital Other Operating Cashflow Cashflow from Operations Capital Expenditure
(603)
(294)
(82)
1,983 (1,449)
356
365
413
2,626
3,279
4,881
4,094
2,756
(93)
(2,677)
(2,690)
(3,968)
(3,431)
(3,773)
New Investments
(235)
55
(18)
-
-
Others
(391)
(479)
(423)
-
-
(3,302)
(3,115)
(4,409)
(3,431)
(3,773)
Cashflow from investing activities Net Operating Cashflow
(676)
165
472
663
(1,017)
Dividends paid to ordinary shareholders
(499)
(598)
(599)
(900)
(1,440)
Proceeds from issue of shares Increase in Loans Effects of Exchange Rates on Cash
-
-
1,329
1,837
500
1,500
(16)
(13)
-
Other Financing Cashflow
1,245
(179)
(507)
2,000
Cashflow from financing activities
2,070
(1,098)
719
1,600
(134)
Total cash generated
1,393
(933)
1,191
2,263
(1,151)
Cash at beginning of period Implied cash at end of year
Ratios Capex/Sales Source: Company data, Al Rajhi Capital
Disclosures Please refer to the important disclosures at the back of this report.
(5)
(305)
-
(194)
417
1,811
797
2,039
1,482
1,811
877
1,987
4,302
331
12/13A
12/14A
12/15A
12/16E
12/17E
23.9%
21.3%
28.8%
22.5%
22.5%
3
Almarai Company
Food-Diversified – Industrial 20 July 2016
IMPORTANT DISCLOSURES FOR U.S. PERSONS This research report was prepared by Al Rajhi Capital (Al Rajhi), a company authorized to engage in securities activities in Saudi Arabia. Al Rajhi is not a registered broker-dealer in the United States and, therefore, is not subject to U.S. rules regarding the preparation of research reports and the independence of research analysts. This research report is provided for distribution to “major U.S. institutional investors” in reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”). Any U.S. recipient of this research report wishing to effect any transaction to buy or sell securities or related financial instruments based on the information provided in this research report should do so only through Rosenblatt Securities Inc, 20 Broad Street 26th Floor, New York NY 10005, a registered broker dealer in the United States. Under no circumstances should any recipient of this research report effect any transaction to buy or sell securities or related financial instruments through Al Rajhi. Rosenblatt Securities Inc. accepts responsibility for the contents of this research report, subject to the terms set out below, to the extent that it is delivered to a U.S. person other than a major U.S. institutional investor. The analyst whose name appears in this research report is not registered or qualified as a research analyst with the Financial Industry Regulatory Authority (“FINRA”) and may not be an associated person of Rosenblatt Securities Inc. and, therefore, may not be subject to applicable restrictions under FINRA Rules on communications with a subject company, public appearances and trading securities held by a research analyst account.
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Disclosures Please refer to the important disclosures at the back of this report.
4
Almarai Company
Food-Diversified – Industrial 20 July 2016
Disclaimer and additional disclosures for Equity Research Disclaimer This research document has been prepared by Al Rajhi Capital Company (“Al Rajhi Capital”) of Riyadh, Saudi Arabia. It has been prepared for the general use of Al Rajhi Capital’s clients and may not be redistributed, retransmitted or disclosed, in whole or in part, or in any form or manner, without the express written consent of Al Rajhi Capital. Receipt and review of this research document constitute your agreement not to redistribute, retransmit, or disclose to others the contents, opinions, conclusion, or information contained in this document prior to public disclosure of such information by Al Rajhi Capital. The information contained was obtained from various public sources believed to be reliable but we do not guarantee its accuracy. Al Rajhi Capital makes no representations or warranties (express or implied) regarding the data and information provided and Al Rajhi Capital does not represent that the information content of this document is complete, or free from any error, not misleading, or fit for any particular purpose. This research document provides general information only. Neither the information nor any opinion expressed constitutes an offer or an invitation to make an offer, to buy or sell any securities or other investment products related to such securities or investments. It is not intended to provide personal investment advice and it does not take into account the specific investment objectives, financial situation and the particular needs of any specific person who may receive this document. Investors should seek financial, legal or tax advice regarding the appropriateness of investing in any securities, other investment or investment strategies discussed or recommended in this document and should understand that statements regarding future prospects may not be realized. Investors should note that income from such securities or other investments, if any, may fluctuate and that the price or value of such securities and investments may rise or fall. Fluctuations in exchange rates could have adverse effects on the value of or price of, or income derived from, certain investments. Accordingly, investors may receive back less than originally invested. Al Rajhi Capital or its officers or one or more of its affiliates (including research analysts) may have a financial interest in securities of the issuer(s) or related investments, including long or short positions in securities, warrants, futures, options, derivatives, or other financial instruments. Al Rajhi Capital or its affiliates may from time to time perform investment banking or other services for, solicit investment banking or other business from, any company mentioned in this research document. Al Rajhi Capital, together with its affiliates and employees, shall not be liable for any direct, indirect or consequential loss or damages that may arise, directly or indirectly, from any use of the information contained in this research document. This research document and any recommendations contained are subject to change without prior notice. Al Rajhi Capital assumes no responsibility to update the information in this research document. Neither the whole nor any part of this research document may be altered, duplicated, transmitted or distributed in any form or by any means. This research document is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or which would subject Al Rajhi Capital or any of its affiliates to any registration or licensing requirement within such jurisdiction.
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Disclosures Please refer to the important disclosures at the back of this report.
5
