Cairo – Mubasher: Pharos Securities Brokerage put forward a ‘Hold’ recommendation on Juhayna Food Industries after getting excluded from the Egyptian Exchange’s main index (EGX30), according to a research note.
In addition, the company’s fair value was set at EGP 6.40 per share, the research note revealed.
Net income dropped to EGP 30 million, lower 54% from EGP 65 million in the same period last year.
In the second quarter of 2016, net income dropped to EGP 30 million, lower 54% from EGP 65 million in the same period last year and gross profit and EBITDA margins went down 427 and 689 basis points respectively.
The main driver behind this drop is the country’s FX crunch and high selling, general, and administrative sales (SGA), the research firm stated.
The Egyptian pound’s depreciation increased the company’s cost of gross sales. As 35% of COGS are foreign currency denominated, while less than 5% of revenues are generated in foreign currency, leaving the company highly exposed to the FX crunch and weaker EGP, the company was left highly exposed to the FX crunch and weaker EGP.
Further, SGA sales also went up to 21% because of high competition and the company’s focus on maintaining market share.
On the other hand, Q2 consolidated revenues rose 21% year-on-year to EGP 1,333 million.
Juice segment played a big role in Q2 revenue’s gains rather than the dairy bracket, which should carry negative impact on margins, since Juice delivered lower gross processing margin.
