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AGRICULTURE & FOOD INDUSTRIESNational AgricultureAlsoknown asNADECPricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR38.4SR2.3bn ($615.2mn)60.0 mn52 week range H/L (SR) 45.3/23.5Avg daily turnover (mn) SR US$3m 18.67 4.9812m 13.66 3.65Raw Beta 6m 3yr0.84 1.08ReutersBloomberg6010.SENADEC ABPrice perform (%) 1M 3M 12MAbsolute (%) 12 12 (12)Market (%) 6 32 (39)Sector (%) 4 21 (22)Website: www nadec.com.saValuation multiples2006 2007 2008P/E (x) 19.7 22.0 23.6P/B (x) 1.6 2.4 1.8P/Sales (x) 1.9 2.3 1.4Div yield (%) 3.5 - 2.4Weightage (%)TASI (free float weight) 0.26MSCI Saudi (domestic – small cap) 2.71Free float (%)Free float 50.04Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Sep-08 Jan-09 M ay-09TASITop 5 shareholders (%)5040302010-NADEC (RHS)Public Investment Fund 20.0Suleiman Abdul Aziz Saleh Al Rajhi 19.7Saleh Abdul Aziz Saleh Al Rajhi 11.4Abdullah Abdul Aziz Saleh Al Rajhi 8.3Riyad Mohammed Abdullah AlHumaidanSource: NCBC Research7.5National Agriculture Development Company (NADEC) commenced operations in1981 with a 20% government stake. The company focuses on agriculturalproduction, food processing and distribution. NADEC operates in three businesssegments – agricultural, dairy and juice products, all sold under the NADEC brand.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 703 852 1,083 1,339 23.6 24.0EBITDA SRmn 142 183 196 258 31.6 22.0Net Income SRmn 58 81 116 80 (30.5) 11.6Assets SRmn 1,270 1,368 1,900 2,414 27.0 23.9Equity SRmn 942 977 1,064 1,060 (0.4) 4.0Total Debt SRmn 57 103 445 922 107.0 153.6Cash & Equiv SRmn 27 4 17 18 7.1 (12.3)EBITDA Mgn % 20.2 21.4 18.1 19.3 - -Net Mgn % 8.2 9.5 10.7 6.0 - -ROE % 6.3 8.5 11.3 7.6 - -ROA % 4.9 6.2 7.1 3.7 - -Div Payout % 77.2 69.8 - 56.0 - -EPS SR 7.8 2.2 2.8 1.3 (52.5) NMBVPS SR 126.5 25.9 25.9 17.7 (31.9) NMSource: Company, NCBC ResearchSegment-wise business analysisProduct segment 2007 Geographic 2007%Rev % Net Inc Breakup %Rev % Net IncDairies, Fresh & Canned vegetables 70 Saudi Arabia 100Wheat, Corn & Potatoes farming 30Source: Company, NCBC Research• Business brief: The Company offers a wide range of products under each of itsoperating segments. Under its agricultural segment, NADEC offers manufacturedproducts such as tomato paste, grains, vegetables, fruits, fodder, olives and honey.The dairy product segment offers long-life products (including cheese and milk),deserts and special products. The juice segment offers a range of fresh and long-lifejuices in different size containers.• Financials: NADEC’s revenues have shown consistent growth with 23.6% y-o-ygrowth in 2008 and a CAGR of 24.0% during 2005-08. Driven by higher sales,NADEC’s EBITDA also grew 31.6% y-o-y. However, the company’s net incometumbled 30.5% in 2008 largely due to higher interest expenses during the year. TheROE of the company fell to 7.6% while ROA also declined to 3.7% in 2008.• Recent developments: In April 2009, the company recorded a net loss of SR4.4mnfor 1Q-09 vs. SR4.1mn net profit in 1Q-08. In February 2009, the company won aninitial court ruling over a land dispute against Saudi Aramco. In November ’08,NADEC announced to enhance focus in the GCC region due to the growing demandand signed a long-term contract with UAE based Planet Nutrition. In April 2008, thecompany announced, its shareholders approval of one-for-two bonus shares thusmaking capital to 600 mn Saudi riyals from 400 mn Saudi riyals.JUNE 2009NATIONAL AGRICULTURE164