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Raya LTFV downgraded to LE 9/share at CI Capital

CI Capital downgraded, in a recent study, Raya Holding (RAYA) LTFV by 23% to LE 9/share, down from LE 11.7/share.
Raya Holding | 30.11.2011

CI Capital downgraded, in a recent study, Raya Holding (RAYA) LTFV by 23% to LE 9/share, down from LE 11.7/share.

Moreover, it cut target price 9% to EGP5/share. Given the 28% upside potential, we maintain our Buy rating.

The company exhibited a 40% YoY growth in its 3Q11 earnings, reaching EGP12.6mn (+6% above CI Capital Research estimates of EGP11.9mn). This followed a 13% YoY increase in top line to EGP727mn coupled with a 102bps improvement in EBITDA margin to 5.3%.

Due to the recent market sell-off, RAYA is currently trading at an attractive 2012E PER of 5.1x, compared to international peer average of 7.8x.

In this note, we have raised our yearend and FY12E top line estimates by an average of 7%, based on raised estimates for Trade segment revenues. This is expected to outweigh the low performance of the IT segment on freezing most of government and corporate projects following the January 25 Revolution.

While low performance in 1Q11 should drive down yearend earnings by 9%, earnings are expected to show double-digit growth going forward.