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AGRICULTURE & FOOD INDUSTRIESHalwani Brothers Co.PriceSR40.0Pricing / Valuation as on May 27, 2009Mkt capSR1.1bn ($305.2mn)Sh. outstanding28.6mnKey statistics52 week range H/L (SR) 40.0/14.5Avg daily turnover (mn) SR US$3m 57.40 15.336m 58.29 15.57Raw Beta 6m 1yr0.78 NAReuters6001.SEBloombergHB ABPrice perform (%) 1M 3M 12MAbsolute (%) 61 96 NAMarket (%) 6 32 (39)Sector (%) 4 21 (22)Website: www.halwani.com saValuation multiples2006 2007 2008P/E (x) N/A N/A 15.4P/B (x) N/A N/A 1.2P/Sales (x) N/A N/A 0.8Div yield (%) N/A N/A 7.29Halwani Brothers Company (HB), headquartered in Jeddah, Saudi Arabia wasestablished in 1952. It is engaged in production, marketing and distribution of foodproducts within and outside Saudi Arabia. It has over 26 brands and 15 factoriesand plants in Saudi Arabia and Egypt.Company financials2006 2007 2008YoY(%)CAGR(%)(06-08)Net Revenues SRmn 517 551 758 37.4 21.1EBITDA SRmn 66 61 79 29.1 9.4Net Income SRmn 39 33 38 14.4 (0.9)Assets SRmn 424 438 647 47.4 23.4Equity SRmn 254 267 485 81.2 38.0Total Debt SRmn 45 51 66 27.4 20.2Cash & Equiv SRmn 34 15 188 1143.4 134.9EBITDA Mgn % 12.7 11.0 10.4 - -Net Mgn % 7.5 6.0 5.0 - -ROE % 15.3 12.8 10.1 - -ROA % 9.2 7.7 7.0 - -Div Payout % - - 112.3 - -EPS SR 9.7 1.7 1.3 (19.9) NMBVPS SR 63.6 13.4 17.0 26.9 NMSource: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncWeightage (%)TASI (free float weight) 0.11MSCI Saudi (domestic)N/AFree float (%)Free float 44.49Relative share price perf.7,0005,0003,000Oct-08TASIM ar-09Top 5 shareholders (%)5040302010-H B (RHS)Dalat Industrial Investment Co 55.5Mohammed Abdulhamid Mahmoud 6.9HalwaniSource: NCBC ResearchSource: Company, NCBC Research• Business brief: HB is involved in production of cheese, ice-cream, frozen andprocessed meat, jams, grains, juices, dates and halawa and manufacture of tissues.It has production capacity of 12,200 tons of Tahina per year, 20,100 tons of Halwaper year, 22,950 tons of meat per year, 3,000 tons of cheese per year, 3,348 tons ofArabic sweets per year, 4,500 tons of dairy products per year and 9,996 tons of jamper year.• Financials: HB’s revenues increased 37.4% y-o-y to SR757.5mn in 2008. However,the company’s EBITDA margin declined 60 basis points y-o-y to 10.4% due toincrease in cost of sales. The company’s net income recorded a 14.4% y-o-y growthfrom SR33.3mn in 2007 to SR38.2mn in 2008.• Recent developments: In April 2009, the company recorded 60.4% y-o-y decline in1Q-09 net income to SR12.5mn. In September 2008, the company sought a loanfrom Saudi Industrial Development Fund for building an industrial complex in Jeddahfor SR380mn. In July 2008, the company announced its initial public offering for8.57mn shares at SR20 each that will boost its capital to SR285.7mn. The IPOreceived a huge response from the public and was oversubscribed over 9 times.JUNE 2009HALWANI BROTHERS CO172