Hermes Ups Juhayna FV to EGP12.30/Share, Reiterates Neutral

In a report issued today on Egypt-listed dairy and juice producer Juhayna Food Industries Co., EFG-Hermes upgraded the stock’s fair value by 16% to EGP 12.3 from EGP 10.6; with 3% downside potential from its market value of EGP 12.7 on October 31.
EFG also reiterated its Neutral recommendation on the stock.

“We expect Juhayna’s Q3-13 results (due this week) to disappoint as the usually strong quarter was impaired by social unrest and the imposition of a temporary countrywide curfew that affected distribution and consumer buying patterns, impairing revenue growth,” EFG said “We expect nearly flat headline earnings (+2% Y-o-Y) versus bullish consensus forecasts of c22% growth. Accordingly, we expect weak share price performance post results release.”

According to the report issuer, outlook beyond Q3-13 remains unchanged. It expected 2013-15 earnings to grow at a solid 23% CAGR, driven by conversion to packaged from loose products, a more-than-doubling of yogurt capacity and margin strength.