Almarai Co. -Equity Report -10-06-2012

12-Month Fair Value: SAR 67.30
Recommendation: Hold – Risk Level: 2**
Reason for Report: General Update

Almarai held its fourth annual investors’ event. Almarai held a well attended analysts’ day on June 6, 2012, in Riyadh that included visits to the company’s Al Badiah farm, the Kharj bakery plant, the infant nutrition plant and the central processing plant. In addition, management gave a presentation during which they discussed the latest on the company.

We made some changes in our forecasts but our fair value remains at SAR 67.30. We tweaked our sales assumptions to reflect the capex program and included IDJ as a consolidated entity. The changes we made did not affect our fair value estimate; hence, we maintain our “Hold” recommendation.
We feel that long-term value-seekers should use any dips in Almarai’s stock price to build a position in the GCC’s leading food and beverage (F&B) company that enjoys very strong fundamentals.