Savola Group Close to fair value - Al Rajhi Capital

Savola Group Company
Food-Diversified –Industrial
28 March 2012
Figure 27 Savola: comparables for sugar business
Comparables Bloomberg Ticker Market Cap (mn SAR) Country name EV (mn SAR)
2011A 2012E 2011A 2012E
Tongaat Hulett TON SJ Equity 5,376 Johannseburg 8,218 943 994 8.7 8.3
Suedzucker AG SZU GY Equity 22,422 Germany 33,136 5,092 5,035 6.5 6.6
TATE & LYLE PLC TATE LN Equity 19,943 London 22,631 3,186 2,697 7.1 8.4
Cosan SA Industria CSAN3 BZ Equity 29,098 Brazil 37,938 4,468 5,474 8.5 6.9
Aggregate 101,922 13,689 14,200 7.4 7.2
Source: Bloomberg, Al Rajhi Capital, as of 26 th March, 2012
Figure 28 Savola: comparables for plastic business
EBITDA (mn SAR)
EV/EBITDA
Plastics
We have used a selection of international companies as a base of comparison with Savola’s
Plastic division. We have also included Takween (which was recently added to the Saudi stock
market) into our comparison universe.
Comparables Bloomberg Ticker Market Cap (mn SAR) Country name EV (mn SAR)
2011A 2012E 2011A 2012E
Takween TAKWEEN AB Equity 1,913 Saudi 2,153 131 N/A 16.4 N/A
Ball Corp BLL US Equity 24,316 New York 36,081 4,381 4,591 8.2 7.9
Amcor LTD AMCRY US Equity 34,213 Australia 47,874 4,824 6,143 9.9 7.8
Aggregate 86,108 9,336 10,734 9.2 8.0
Source: Bloomberg, Al Rajhi Capital, as of 26 th March, 2012
Figure 29 Savola: comparables for retail business
EBITDA (mn SAR) EV/EBITDA
Retail
Savola’s biggest division in terms of revenue share is retail. It is considered the leader in the
Saudi market and has minor retail operations outside the Kingdom. It has one store in the
UAE and eleven stores in Lebanon. Saudi operations account for 94% of the total retail
turnover. We have used a selection of companies in the local and international markets as a
base of comparison with Savola’s retail division.
Comparables Bloomberg Ticker Market Cap (mn SAR) Country name EV (mn SAR)
2011A 2012E 2011A 2012E
Alothaim Markets AOTHAIM AB Equity 2,070 Saudi 2,357 219 266 10.7 8.9
Tesco PLC TSCO LN Equity 163,074 London 217,825 30,320 31,437 7.2 6.9
Wall-Mart WMT US Equity 786,031 New York 978,518 130,090 136,242 7.5 7.2
Sainsbury PLC SBRY LN Equity 35,910 London 48,697 7,130 7,751 6.8 6.3
Aggregate 1,247,398 167,759 175,696 7.4 7.1
Source: Company data, Al Rajhi Capital
Figure 30 Savola: comparables for pasta business
EBITDA (mn SAR) EV/EBITDA
Pasta
We have used a selection of international companies as a base of comparison with Savola’s
pasta division.
Comparables Bloomberg Ticker Market Cap (mn SAR) Country name EV (mn SAR)
2011A 2012E 2011A 2012E
Ebro Foods Sa EBRO SM Equity 11,082 Spain 12,917 1,519 1,541 8.5 8.4
M Dias Branco SA MDIA3 BZ Equity 11,230 Brazil 12,173 1,081 1,263 11.3 9.6
Aggregate 25,090 2,601 2,804 9.6 8.9
Source: Company data, Al Rajhi Capital
EBITDA (mn SAR) EV/EBITDA
Investments
Savola’s main investments are in Almarai and Herfy; both companies are listed on the Saudi
Stock exchange and will be included in our valuations at their market value. Currently, we are
Overweight on Almarai and Neutral on Herfy. Had we rated any of these investments as
underweight, we would have used our estimated fair value for it. Other Savola’s investments
include real estate and private equity investments. We will include these investments as their
book values due to limited available information.
Disclosures Please refer to the important disclosures at the back of this report. 14