KEY THEMES
Despite being moved to the EGX’s “List D” yesterday, Juhayna Food Industries' [JUFO] stock rose on Wednesday, ending a 3-day losing streak. The decision was due to JUFO’s delay in releasing its 2020 financial results, let alone Q1 2021. The List D means that the price limits on the stock will be 5% with no pre-market session. Despite the string of negative news that surrounded the name in 2021, the market reacted positively yesterday, as the stock is wandering in an all-time low territory. Such performance may have been prompted by media reports that ADQ, the Abu Dhabi sovereign wealth fund, is interested to invest in JUFO as it seeks more investments in Egypt.
This is in line with our view that two events will likely move the market in the coming period: (1) earnings and (2) M&A activities. We think the news will definitely reflect positively on JUFO, especially after the violent sell-off that JUFO suffered ytd. We note that, JUFO is trading at a 2021e P/E of 6.7x, which we see as too repressed for a consumer player of its caliber.