to download the complete report - GulfBase.com

AGRICULTURE & FOOD INDUSTRIESHail AgricultureAlso known asHADCOPriceSR27.4Pricing / Valuation as on May 27, 2009Mkt capSR0.8bn ($219.5mn)Sh. outstanding30.0mnKey statistics52 week range H/L (SR) 29.4/13.9Avg daily turnover (mn) SR US$3m 22.79 6.0912m 19.49 5.20Raw Beta 6m 3yr0.94 1.11Reuters6030.SEBloombergHAACO ABPrice perform (%) 1M 3M 12MAbsolute (%) 7 30 7Market (%) 6 32 (39)Sector (%) 4 21 (22)Website: www hadco.com.saValuation multiples2006 2007 2008P/E (x) 29.7 19.9 9.8P/B (x) 2.0 2.3 1.3P/Sales (x) 2.9 3.1 1.6Div yield (%) 1.8 1.5 2.4Weightage (%)TASI (free float weight) 0.18MSCI Saudi (domestic –small cap) 1.0Free float (%)Free float 99.99Relative share price perf.11,000409,000307,000205,000103,000-M ay-08 Sep-08 Jan-09 M ay-09TASIHail Agriculture (RHS)Top 5 shareholders (%)Saleh Abdulaziz Al Rajhi and Co. 6.0Source: NCBC ResearchHail Agriculture Development Company (HADCO) headquartered in Hail, wasestablished in 1982. In Nov.08, Almarai offered to buy HADCO through a share swaparrangement, which is pending for shareholders’ and regulatory approvals. Thecompany markets diversified agricultural products under the brand ‘HADCO’.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 244 283 333 395 18.7 17.5EBITDA SRmn 72 86 112 132 18.0 22.3Net Income SRmn 31 28 51 65 26.7 27.9Assets SRmn 516 577 621 619 (0.4) 6.3Equity SRmn 397 414 451 495 9.7 7.6Total Debt SRmn - 41 45 20 (55.0) NMCash & Equiv SRmn 24 15 31 10 (68.2) (25.9)EBITDA Mgn % 29.7 30.5 33.7 33.5 - -Net Mgn % 12.7 9.9 15.4 16.4 - -ROE % 8.1 6.9 11.8 13.7 - -ROA % 6.5 5.1 8.5 10.5 - -Div Payout % 48.4 53.6 29.3 23.1 - -EPS SR 5.2 0.9 1.7 2.2 26.7 NMBVPS SR 66.2 13.8 15.0 16.5 9.7 NMSource: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncPoultry 59.0 33.1Agriculture 41.0 66.9Source: Company, NCBC Research• Business brief: HADCO operates through two main divisions—Agriculture andPoultry—over an area of 35,000 hectares. Under the Agriculture segment, HADCOgrows various products including wheat; yellow corn; alfalfa; palm trees producingdates and grapes. Under the Poultry segment, the company operates six poultryfarms, and has an annual capacity of 215,000 hens and 31mn eggs.• Financials: HADCO’s revenues increased 18.7% y-o-y to SR394.9mn in 2008 drivenby growth in the Agriculture and Poultry segment. Driven by this, the company’sEBITDA grew 18.0% y-o-y to SR132.3mn. However, EBITDA margins declined 20basis points y-o-y to 33.5% in 2008 mainly due to higher operating (S,G&A andamortization) expenses.• Recent developments: In May 2009, the company agreed on a share swap dealwith Almarai Co. wherein the formers’ shareholders will receive 1 share of Almarai for5 shares in HADCO. In April 2009, the company announced 73.0% y-o-y decline 1Q-09 net income to SR4.9mn. In February 2009, HADCO entered into a rental contractwith Ministry of Agriculture for a 28.5 mn sq meter land in Hail primarily aimed atexpansion of poultry business. HADCO announced, in February 2009, plans to investin farming activity in Sudan. In November 2008, the company appointed a financialand legal advisor to evaluate Saudi based Al Marai Company bid to take over thecompany through a share swap of 1:6 shares for HAIL’s shareholders.JUNE 2009HAIL AGRICULTURE165