1 Investment case • A robust business model, which provides both EPC as well as energy solutions. • SWDY’s segmental nature provides a logistical advantage and will enable the company to leverage on its extensive footprint in the MEA region. • SWDY’s management aims to reduce GCC competition risk for the wire and cable LoB via expansion into African countries i.e. Ethiopia. • Turnkey’s segmental revenue growth to benefit from MENA governments’ heavy investment in infrastructure. Upside Catalysts • SWDY has a cost advantage over other regional cable producers. This is because SWDY production facilities are located in countries that have cheap labor, energy, and S G&A costs. • Continuing with the M&A activities, we expect that SWDY might further benefit from increasing its market share as well as more distribution channels. • Should MENA’s governments’ tax shelters increase (as suggested by the Qatari government) the construction LoB’s earnings should improve. Downside Risks • The GCC area could experience an overcapacity in 2011. Such net additions might increase competition which, in turn, could negatively impact SWDY, decreasing it’s absolute gross profit per ton. • SWDY operates in emerging markets of MENA region, which expose it to riskier business environments. El Sewedy Electric – SWDY Company Profile El Sewedy Electric is a integrated cables and electrical products manufacturer in the Middle East, with the specialty in providing complete and integrated energy Solutions in sectors as diverse as: telecom, energy management, transformers, EPC, electrical products and wind energy generation. Shareholder Structure • El Sewedy Family 73% •Hassan A Salam 2% • Free Float 25% 52-Week Performance & Share Data (*EGX suspended 27 th Jan – 23 rd Mar 2011) SWDY.CA/SWDY EY | Hold Recommendation | Moderate Risk | LTFV EGP56.8 | Target Price EGP45.4 | Analyst: Muhammad El Ebrashi Key Performance Indicators EG P m n/FY E D ecem ber 2007a 2008a 2009a 2010a 2011e 2012e R evenue 9,348.3 11,445.9 9,290.7 12,902.0 14,942.2 16,806.1 G rowth R ate (% ) 62.7 22.4 -18.8 38.9 15.8 12.5 EB ITD A 967.7 1,242.8 1,035.0 1,363.1 1,295.9 1,524.8 G rowth R ate (% ) 51.5 28.4 -16.7 31.7 -4.9 17.7 EB ITD A m argin (% ) 10.4 10.9 11.1 10.6 8.7 9.1 NetIncom e 713.1 828.4 633.6 795.5 661.3 796.8 G rowth R ate (% ) 43.6 16.2 -23.5 25.6 -16.9 20.5 N etm argin (% ) 7.6% 7.2% 6.8% 6.2% 4.4% 4.7% PER 9.5x 8.2x 10.7x 8.5x 10.3x 8.5x P /BV 2.2x 1.8x 1.6x 1.4x 1.2x 1.0x EV/EB ITD A 8.4x 8.3x 10.0x 8.1x 6.8x 5.5x N etdebt/EB ITDA 1.4x 2.8x 3.5x 3.1x 1.6x 1.1x D ividend Yield N/A 1.9% N/A 2.5% 2.1% 2.5% S o urc e: C IC R D atabas e Sector: Engineering & C ables ISIN : EG S3G 0Z1C014 LastP rice (EG P) 39.48 52 W eek H igh 56.89 52 W eek Low 33.81 100-dayA v. Volum e 229 (000' shares perday) N o. ofShares (m n) 171.9 M arketC ap (EG Pmn 6,785 *P rices as atclose on 30th M ay2011 - 500 1,000 1,500 2,000 2,500 30.0 35.0 40.0 45.0 50.0 55.0 60.0 Jun-10 Aug-10 Oct-10 Dec-10 Mar-11 May-11 Shrs('000) EGP Volume SW DY EG X 30rebased
Investment case A robust business model, which provides both EPC as well as energy solutions.
Feb 24, 2016
El Sewedy Electric – SWDY. SWDY.CA/SWDY EY | Hold Recommendation | Moderate Risk | LTFV EGP56.8 | Target Price EGP45.4 | Analyst: Muhammad El Ebrashi. Investment case A robust business model, which provides both EPC as well as energy solutions. - PowerPoint PPT Presentation
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1
Investment case• A robust business model, which provides both EPC as well as energy solutions.• SWDY’s segmental nature provides a logistical advantage and will enable the
company to leverage on its extensive footprint in the MEA region. • SWDY’s management aims to reduce GCC competition risk for the wire and cable
LoB via expansion into African countries i.e. Ethiopia.• Turnkey’s segmental revenue growth to benefit from MENA governments’ heavy
investment in infrastructure.
Upside Catalysts• SWDY has a cost advantage over other regional cable producers. This is because
SWDY production facilities are located in countries that have cheap labor, energy, and S G&A costs.
• Continuing with the M&A activities, we expect that SWDY might further benefit from increasing its market share as well as more distribution channels.
• Should MENA’s governments’ tax shelters increase (as suggested by the Qatari government) the construction LoB’s earnings should improve.
Downside Risks• The GCC area could experience an overcapacity in 2011. Such net additions might
increase competition which, in turn, could negatively impact SWDY, decreasing it’s absolute gross profit per ton.
• SWDY operates in emerging markets of MENA region, which expose it to riskier business environments.
El Sewedy Electric – SWDY
Company Profile
El Sewedy Electric is a integrated cables and electrical products manufacturer in the Middle East, with the specialty in providing complete and integrated energy Solutions in sectors as diverse as: telecom, energy management, transformers, EPC, electrical products and wind energy generation.
Shareholder Structure• El Sewedy Family 73%•Hassan A Salam 2%• Free Float 25%
52-Week Performance & Share Data (*EGX suspended 27th Jan – 23rd Mar 2011)
SWDY.CA/SWDY EY | Hold Recommendation | Moderate Risk | LTFV EGP56.8 | Target Price EGP45.4 | Analyst: Muhammad El Ebrashi
Key Performance Indicators
EGP mn/ FY End:December 2007a 2008a 2009a 2010a 2011e 2012e
Revenue 9,348.3 11,445.9 9,290.7 12,902.0 14,942.2 16,806.1 Growth Rate (%) 62.7 22.4 -18.8 38.9 15.8 12.5EBITDA 967.7 1,242.8 1,035.0 1,363.1 1,295.9 1,524.8 Growth Rate (%) 51.5 28.4 -16.7 31.7 -4.9 17.7EBITDA margin (%) 10.4 10.9 11.1 10.6 8.7 9.1Net Income 713.1 828.4 633.6 795.5 661.3 796.8 Growth Rate (%) 43.6 16.2 -23.5 25.6 -16.9 20.5Net margin (%) 7.6% 7.2% 6.8% 6.2% 4.4% 4.7%
P ER 9.5x 8.2x 10.7x 8.5x 10.3x 8.5xP /BV 2.2x 1.8x 1.6x 1.4x 1.2x 1.0xEV/EBITDA 8.4x 8.3x 10.0x 8.1x 6.8x 5.5xNet debt/EBITDA 1.4x 2.8x 3.5x 3.1x 1.6x 1.1xDividend Yield N/A 1.9% N/A 2.5% 2.1% 2.5%
Source: CICR Database
Sector: Engineering & CablesISIN: EGS3G0Z1C014Last P rice (EGP ) 39.4852 Week High 56.8952 Week Low 33.81100-day Av. Volume 229 (000' shares per day)
No. of Shares (mn) 171.9 Market Cap (EGP mn) 6,785 *P rices as at close on 30th May 2011
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