Retail Sector Report - Al Rajhi Capital

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Fawaz Abdulaziz Alhokair Retail –Industrial 05 January 2013 Corporate summary Share information Valuation Fawaz Abdulaziz Alhokair Company is a leading fashion retailer in Saudi Arabia, with a market capitalization of US$2bn. The company primarily sells a wide gamut of fashion items such as luxury apparel, sport wear, shoes, bags, and fashion accessories. Alhokair is a franchisee for 50 international brands such as Zara, Gap, Marks & Spencer, and Aldo. Market cap (SAR/US$) 7.53bn / 2.007bn 52-week range 62.50 - 107.5 Daily avg volume (US$) 1.220mn Shares outstanding 70.00mn Free float (est) 30% Performance: 1M 3M 12M Absolute 10.5% 13.8% 66.7% Relative to index 7% 13.2% 58.2% Major Shareholder: Fas Company 49.0% Abdulmajeed Abdulaziz Alhokair 7.0% Source: Bloomberg, Al Rajhi Capital Period End 03/11A 03/12A 03/13E 03/14E Revenue (SARmn) 2,575 3,203 4,327 5,149 EBITDA (SARmn) 307 545 739 830 Net Profit (SARmn) 316 447 602 681 EPS (SAR) 4.52 6.39 8.60 9.73 DPS (SAR) 2.50 2.00 3.00 4.50 EPS Growth 36.6% 41.4% 34.6% 13.1% EV/EBITDA (x) 21.2 12.3 10.0 9.0 P/E (x) 23.8 16.8 12.5 11.0 P/B (x) 6.9 5.4 4.2 3.5 Dividend Yield 2.3% 1.9% 2.8% 4.2% Source: Company data, Al Rajhi Capital Expectations for Q3 2012/2013 Decent results expected Figure 34 Alhokair : Q3 & FY2012/13 results estimates (SAR) mn 2011Q3A 2012Q3E YOY % chg. FY2011/12A FY2012/13E YOY % chg. Revenues 758.3 1,006.4 32.7% 3,202.7 4,327.4 35.1% EBITDA 107.9 140.9 544.5 739.4 35.8% EBITDA margin (%) 14.2% 14.0% 17.0% 17.1% Operating profit 74.7 98.7 32.1% 425.6 586.2 37.7% Operating profit margin (%) 9.9% 9.8% 13.3% 13.5% Net Income 76.5 101.3 32.4% 447.4 602.3 34.6% Source: Company data, Al Rajhi Capital Disclosures Please refer to the important disclosures at the back of this report. 24
Fawaz Abdulaziz Alhokair Retail –Industrial 05 January 2013 Income Statement (SARmn) 03/10A 03/11A 03/12A 03/13E 03/14E Revenue 2,074 2,575 3,203 4,327 5,149 Cost of Goods Sold (1,161) (1,435) (1,755) (3,093) (3,958) Gross Profit 914 1,139 1,447 1,235 1,190 Government Charges S.G. & A. Costs (675) (877) (1,022) (649) (522) Operating EBIT 239 262 426 586 668 Cash Operating Costs (1,757) (2,268) (2,658) (3,588) (4,319) EBITDA 318 307 545 739 830 Depreciation and Amortisation (78) (45) (119) (153) (162) Operating Profit 239 262 426 586 668 Net financing income/(costs) (43) (32) (18) (31) (28) Forex and Related Gains - - - - - Provisions - - - - - Other Income 45 105 76 79 79 Other Expenses Net Profit Before Taxes 241 335 484 634 719 Taxes (11) (15) (36) (33) (36) Minority Interests 1 (3) (1) 1 (2) Net profit available to shareholders 232 316 447 602 681 Dividends (140) (175) (140) (210) (315) Transfer to Capital Reserve 03/10A 03/11A 03/12A 03/13E 03/14E Adjusted Shares Out (mn) 70.00 70.00 70.00 70.00 70.00 CFPS (SAR) 4.41 5.21 8.10 10.77 12.08 EPS (SAR) 3.31 4.52 6.39 8.60 9.73 DPS (SAR) 2.000 2.500 2.000 3.000 4.500 We expect double digit revenue growth in the forecast period Growth 03/10A 03/11A 03/12A 03/13E 03/14E Revenue Growth 9.9% 24.1% 24.4% 35.1% 19.0% Gross Profit Growth 14.4% 24.7% 27.1% -14.7% -3.6% EBITDA Growth 87.7% -3.3% 77.3% 35.8% 12.3% Operating Profit Growth 128.9% 9.5% 62.5% 37.7% 14.0% Net Profit Growth 68.2% 36.6% 41.4% 34.6% 13.1% EPS Growth 68.2% 36.6% 41.4% 34.6% 13.1% Margins 03/10A 03/11A 03/12A 03/13E 03/14E Gross profit margin 44.1% 44.2% 45.2% 28.5% 23.1% EBITDA margin 15.3% 11.9% 17.0% 17.1% 16.1% Operating Margin 11.5% 10.2% 13.3% 13.5% 13.0% Pretax profit margin 11.6% 13.0% 15.1% 14.6% 14.0% Net profit margin 11.2% 12.3% 14.0% 13.9% 13.2% Other Ratios 03/10A 03/11A 03/12A 03/13E 03/14E ROCE 16.9% 19.4% 24.5% 22.7% 22.7% ROIC 27.0% 21.8% 33.2% 36.5% 27.1% ROE 23.7% 28.9% 35.8% 37.7% 34.4% Effective Tax Rate 4.4% 4.5% 7.4% 5.2% 5.0% Capex/Sales 6.0% 2.5% 8.6% 7.7% 4.9% Dividend Payout Ratio 60.5% 55.3% 31.3% 34.9% 46.2% Valuation Measures 03/10A 03/11A 03/12A 03/13E 03/14E P/E (x) 32.5 23.8 16.8 12.5 11.0 P/CF (x) 24.4 20.6 13.3 10.0 8.9 P/B (x) 6.9 6.9 5.4 4.2 3.5 EV/Sales (x) 3.1 2.5 2.1 1.7 1.5 EV/EBITDA (x) 19.9 21.2 12.3 10.0 9.0 EV/EBIT (x) 26.5 24.9 15.7 12.6 11.2 EV/IC (x) 5.5 5.5 4.4 3.1 2.8 Dividend Yield 1.9% 2.3% 1.9% 2.8% 4.2% Source: Company data, Al Rajhi Capital Disclosures Please refer to the important disclosures at the back of this report. 25
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Retail Sector Report - Al Rajhi Capital

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