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AGRICULTURE & FOOD INDUSTRIESSavola GroupAlso known asSavolaPricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR23.1S11.6bn ($3,084.1mn)500.0mn52 week range H/L (SR) 38.3/16.5Avg daily turnover (mn) SR US$3m 24.35 6.5012m 31.64 8.45Raw Beta 6m 3yr0.99 1.13ReutersBloomberg2050.SESAVOLA ABPrice perform (%) 1M 3M 12MAbsolute (%) 0 38 (38)Market (%) 6 32 (39)Sector (%) 4 21 (22)Website: www savola comValuation multiples2006 2007 2008P/E (x) 15.3 14.6 59.8P/B (x) 2.9 2.5 1.8P/Sales (x) 1.9 1.7 0.9Div yield (%) 2.1 3.1 4.1Weightage (%)TASI (free float weight) 1.96MSCI Saudi (domestic – large cap) 2.74Free float (%)Free float 75.73Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Sep-08 Jan-09 M ay-09TASITop 5 shareholders (%)40302010SAVOLA Group (RHS)Mohammed Ibrahim Mohammed Al 11.9EssaAbdullah Mohammed Abdullah Al 8.7RabeahGeneral Organization for Social 9.3InsuranceAl-Muhaid b Co. 8.4Source: NCBC Research-Savola Group is a leading retailer of foods in the Middle East region, withoperations extending as far as North Africa and Central Asia. The group’s businessinterests are divided into two segments: Savola Foods Sector (edible oils, sugarand foods) and Savola Retail Sector (retail outlets, real estate and plastics).Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 6,857 9,097 10,410 13,795 32.5 26.2EBITDA SRmn 657 745 826 990 19.8 14.6Net Income SRmn 1,202 1,149 1,230 202 (83.5) NMAssets SRmn 8,117 11,275 11,590 14,527 25.3 21.4Equity SRmn 2,985 6,084 7,157 6,550 (8.5) 29.9Total Debt SRmn 2,562 2,395 1,903 4,709 147.4 22.5Cash & Equiv SRmn 265 2,894 335 544 62.5 27.0EBITDA Mgn % 9.6 8.2 7.9 7.2 - -Net Mgn % 17.5 12.6 11.8 1.5 - -ROE % 47.6 25.3 18.6 3.0 - -ROA % 16.8 11.8 10.8 1.5 - -Div Payout % 29.9 32.6 45.7 247.1 - -EPS SR 40.1 3.1 3.3 0.4 (87.7) NMBVPS SR 99.5 16.2 19.1 13.1 (31.4) NMSource: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2007%Rev % Net Inc/(Loss) Breakup %Rev % Net Inc/(Loss)Food Manufacturing 58 0 Saudi Arabia 73Retail 36 76 Iran 12Plastics 6 24 Egypt 10Rest 5Source: Company, NCBC Research• Business brief: Savola enjoys a leading position in edible oils and sugar retailing viaits 79 retail outlets spread across the Kingdom. The group operates through affiliatesincluding Afia International (95% stake), Azizia Panda United (80%), and UnitedSugar Co. (65%). It has diversified into real estate with stakes in United PropertiesCo. (100%) and Kinan Intl. Real Estate Development Co. (30%) amongst others.• Financials: During 2008, Savola’s sales were up 32.5% y-o-y from SR10,410mn in2007 to SR 13,795mn in 2008. EBITDA margins recorded a decline of 70 basis pointsto 7.2% in 2008 from 7.9% in 2007 due to higher cost of sales and operatingexpenses during the period. Higher operating expenses coupled with lowerinvestment income also led to a 83.5% y-o-y decline in net income from SR1,230mnin 2007 to SR202.4mn in 2008.• Recent developments: In April ’09, Savola upped stake in Almarai Co., SavolaFoods Co. and Afia Egypt to 29%, 90% and 99.8%, spending SR500mn, SR167mnand SR65mn, respectively. In the same month, Savola released 1Q-09 result,reporting 22.8% y-o-y decline in net income to SR193mn. Further, the companyannounced to hike its annual edible oil refining capacity to 0.4mn tonnes by the endof 2009. In March ‘09, Savola reiterated its expansion plans and looks to open 12new stores in 2009. In Jan 09, Savola got approval to set up a sugar factory in Egypt.JUNE 2009SAVOLA GROUP162