HC: We expect JUFO to preserve its market share and margins

 

Capitalizing on its leading dairy local market share, we expect JUFO to preserve its market share, margins, and increase exports. We estimate its 2025-29e EBITDA and EPS to grow at c19% and c24%, respectivel

In a recent report, HC Brokerage resumed their coverage of Juhayna Food Industries forecasting JUFO to preserve its market share and margins.

Pakinam El-Etriby, Consumers Analyst at HC commented that: “ JUFO navigating a challenging 2021–24 operating environment: In 2021, JUFO experienced a c3 pp y-o-y decline in gross profit margin (GPM) to c29% from a previous three-year average of c31%, impacted by the 2020 COVID-19 lockdowns, disrupting supply chains and energy and commodity prices. As economies began to reopen in 2021, the supply bottlenecks led to further inflationary pressures. In February 2022, the Russian-Ukrainian war worsened the situation, causing additional global supply chain disruptions, leading to higher commodities prices, with crude oil prices surging c40% y-o-y in 2022 after a c64% y-o-y increase in 2021, corn prices rising c19% in 2022 and c60% y-o-y in 2021, soybean prices increasing c13% y-o-y in 2022 and c44% y-o-y in 2021, sugar prices increasing by c5% y-o-y in 2022 and c39% y-o-y in 2021, and skimmed milk powdered (SMP) increasing c15% in 2022 and c23% y-o-y in 2021. In 2023, while commodity prices began to normalize – with oil prices dropping by c17% y-o-y, corn c19%, soybean c9%, and SMP c31% – JUFO’s 2023 GPM remained below c30% due to the several EGP devaluation rounds in October 2022 of c19% and January 2023 of c18%, as JUFO imports more than c30% of its COGS, mainly packaging and SMP, and to a lesser extent concentrates. Nevertheless, in 1H24, JUFO’s GPM improved by c10 pp y-o-y to c35%, helped by the March 2024 economic reforms and the Ras El Hekma investment deal, allowing it to source its USD needs from banks at the official rate, c4% y-o-y lower SMP price, and higher exports margin from concentrates. JUFO’s concentrates revenue (c15% of 1H24 total revenue, up from c9% in 1H23) benefited from the global supply shortage of oranges (expected to last for three years) due to climate change and the March 2024 EGP devaluation, increasing its competitiveness and export margins.

“We forecast JUFO’s revenues to grow at a 2025–29e CAGR of c19% on higher volumes and prices: We expect a relative moderation in inflation in 2025 to a yearly average of c23% from c30% in 2024 to help consumer demand recover. We project JUFO’s volumes to grow at a CAGR of c5% and average selling prices at c13% over 2025–29e. In 2024e, we expect revenues to grow by c48% y-o-y to EGP23.9bn, largely due to a threefold y-o-y increase in concentrate exports to EGP3.24bn (c14% of total sales from c6% in 2023), partially hedging JUFO’s FX needs. In 2025e, we expect revenues to rise by c26% y-o-y to EGP30.0bn, mainly driven by a c25% y-o-y increase in blended selling prices to EGP61.7/liter and a c31% y-o-y increase in concentrates revenue to EGP4.70bn. Starting 2026e, we expect interest rate cuts, declining inflation, and salary adjustments to accelerate consumer demand recovery and drive revenue growth, leading us to estimate a 2025-29e revenue CAGR of c19%.” Pakinan added.

“We estimate JUFO’s EBITDA and EPS to grow at a 2025–29e CAGR of c19% and c24%, respectively, on healthy revenue growth and higher export rebates despite higher net interest expense: In the absence of any external shocks, we generally expect the company to pass additional costs onto consumers to preserve its margins. We expect JUFO’s GPM to expand to 32.5% in 2024e from 26.2% in 2023, despite higher transportation costs in 4Q24 due to the c17% increase in diesel price on 18 October. However, in 2025e, we project a slight c1 pp y-o-y decline to 31.4% and to increase slightly to c32% in 2026e. In 2024e, we forecast EBIT margin to expand by c7 pp y-o-y to 19.8% on the GPM expansion and c4x y-o-y higher export rebates to EGP392m, and project EBIT margin to average c19% over our 2025–29e forecast period, with export rebates growing at a 2025–29e CAGR of c17%. Accordingly, we estimate JUFO’s EBITDA to grow at a 2025–29e CAGR of c19%. Despite expected higher net interest expenses in 2024e and 2025e due to JUFO’s higher EGP-denominated debt – reporting a net debt of EGP2.14bn as of June 2024, up from EGP1.21bn as of 30 March 2024 and EGP150m as of December 2023 – we expect net profit margin (NPM) to expand by c5 pp y-o-y to 11.3% in 2024e, and 12.2% in 2025e. However, starting 2026e, we forecast a gradual increase in NPM to 14.0% by 2029e, driven by easing interest rates. We estimate JUFO’s EPS to grow at a 2025–29e CAGR of c24%.” Consumers Analyst concluded.

Related Posts

Rock Developments unveils Rock Green project in New Heliopolis with EGP 7bn investment

New Milestone for Al Baraka Bank Egypt: Four Prestigious Awards from EMEA Finance Cement Its Leadership in Islamic Finance

With the participation of experts, Invest-Gate issues its recommendations: “Fractional Real Estate: Unlocking New Frontiers of Property Investment in Egypt

LG Egypt Launches “Better Home” Initiative to Facilitate Marriage in Marsa Matrouh and Qena

Zoho Powers Up CRM for Everyone Platform with AI to Elevate Customer Experience in Egypt

QATAR SPORTS INVESTMENTS MARKS 14 YEARS OF TRANSFORMATIVE OWNERSHIP OF PARIS SAINT-GERMAIN

*Huawei Expands Free AI Learning Opportunities Across Egypt Signing 3 MoUs with of Al-Azhar, Egyptian-Russian and 6th of October Universities*

ECT AVIATION LAUNCHES TIME-CRITICAL CARGO ROUTES WITH THE BN2T-4S ISLANDER

آخر الأخبار
جامعة النيل تطلق برنامج "التكامل الابتكاري" بالتعاون مع المركز القومي للبحوث وجمعية المستثمرين بـ6 أ... النساجون الشرقيون تطلق OW Haptech Store: أول متجر فيجيتال من نوعه في العالم لبيع السجاد بالتجزئة محافظ البنك المركزي يشارك في الافتتاح الرسمي للاجتماعات السنوية لبنك التصدير والاستيراد الإفريقي لعا... مجموعة جيمس للتعليم تطلق برنامج جيمس للطفولة المبكرة وزير الصناعة والنقل يلتقي نائب رئيس شركة الستوم الفرنسية العالمية قناة السويس: حركة الملاحة منتظمة ولم تتأثر بحادث غرق الحفار ADMARINE12 «تراث العقارية» تبدأ تسليم وحدات "كمبوند فيلات تراث" بمدينة العبور تأكيداً على التزامها تجاه عملائها المصرية للاتصالات تنتهي من عمليات الإنزال ومسارات العبور الخاصة بالكابل البحري SEA-ME-WE-6 في مصر IdeaCrate تطلق مخيماتها الصيفية عبر جميع فروع أورنج ويلز وحضانة أورنج سيدز وزيرة التضامن تصدر منشورًا بمنح دور الحضانة ترخيصًا موقتًا لمدة ستة أشهر لحين توفيق أوضاعها جي بي أوتو تطلق الجيل الرابع من سيارة Haval H6 بتصميم عصري وتجهيزات ذكية تعيد تعريف تجربة قيادة الـS... وزيرء الصحة والطيران يتفقدان عيادات الحجر الصحي وأجهزة إزالة الرجفان القلبي المستحدثة بمطار القاهرة وزير الإسكان يتابع موقف توفيق الأوضاع بالأراضي المنضمة لأحوزة عددٍ من المدن الجديدة «تطوير التعليم بالوزراء» يبحث التعاون مع أكاديمية الفنون لدعم الموهوبين وزيرا البترول والعمل يطمئنان على الناجين من حادث بارج خليج السويس وزراء الصحة والبترول والعمل يتابعان تداعيات حادث غرق بارجة بحرية بخليج السويس علي الهلباوي يستعد لحفل في ساقية الصاوي وفاة المطرب الشعبي أحمد عامر موعد مباراة فلومينينسي أمام الهلال السعودى فى ربع نهائي كأس العالم للأندية مواعيد مباريات اليوم الاربعاء والقنوات الناقلة