TAKEstock: Consumer Staples (Food & Beverage) - All You Can Eat Festival
Consumer names trade at a deep discount to M&A multiples
Impact: POSITIVE | Degree: STRONG
set on 19 September 2021
The Event: Last Wednesday, EFG Hermes Holding [HRHO] announced that its investment banking arm has successfully concluded advisory on UAE-based Agthia Group’s [ADX: AGTHIA] acquisition of a majority stake of 75.02% in the Egyptian processed meat producer Ismailia Investments (also known as Atyab). We see the acquisition as a catalyst for the market to revisit current valuation levels of other consumer staples names.
The Target: Atyab is a producer of frozen chicken and beef products, with a portfolio of four brand names: (1) Atyab, (2) Meatland, (3) Shiketita, and (4) Furat. Aytab’s founder Attito Raslan will maintain a stake in the company post Agthia’s acquisition. Although not officially announced, the majority stake sale is said to hover around AED573mn or the equivalent to c.EGP2.45bn. Atyab’s revenues grew at a 4-year CAGR (2016-2020) of 28% to AED424mn (c.EGP1.8bn) in 2020 with an EBITDA of AED79mn (c.EGP338mn), implying an EBITDA margin of 19%.
Bottom line – POSITIVE on Consumer Staples: In view of the above, we are POSITIVE on the consumer staples industry. Specifically, we see a potential re-rating for Arabian Food Industries [DOMT], Cairo Poultry [POUL], Edita Food Industries [EFID], Juhayna Food Industries [JUFO], and Obour Land Food Industries [OLFI]. These five names trade at a 49-61% discount to Atyab’s implied acquisition multiples.
Sherif El Etr
Equity Analyst
T +202 3300 5720