National Maize Equity Research - Jazira Capital

8/7/2019 National Maize Equity Research - Jazira Capital

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JAZIRA SECURITIES BROKERAGETuesday, July 06, 2010

NATIONAL MAIZEEquity ResearchSmall Cap Pick

Coke & sweets but popcorn on you

National Maize mainly produces fructose corn syrup (sweetener) products

out of Maize. Being a syrup makes it easily integrated into the carbonated

drinks and confectionery industries.

Its leading product Fructose 55, which represents around 32% of its salesgoes exclusively to sweetening Coca-Cola and Pepsi Cola Egypt carbonated

drinks. National Maize is the sole local producer of Fructose 55, and nearlysatisfies half of the carbonated drink companies needs, while they import therest from abroad. The remaining of the companys primary products are Fruc-

tose 42 and glucose variations are directed to the confectionary industry.

It is expected that National Maize would finalize by August 2010 an upgradeof its Maize grinding facilities to grind 330k ton per annum up from 240ktons now. Thereby boosting production by 38% given that the company hasbeen operating over its full capacity for the past few years.

Another upgrade that is expected to be completed in 2010, is the doubling ofstarch capacity to 70k - 80k tons per annum with a total investment cost ofEGP35 million out of which EGP29 million were disbursed in 2009.

The company buys maize from local importers, whom in-turn purchase it fromthe global markets, mostly from USA and Latin America. This puts NationalMaize vulnerable against raw materials price fluctuations, specially that thecontracts with the carbonated drinks companies are made on a yearly basis,while National Maize currently buys its corn stock on a weekly basis. Otherproducts directed to confectionary producers dont have contracts so the com-

pany adjusts prices based on economic local market conditions and corn prices.

National Maize is currently awaiting the shelf testing phase forits new prod-uct, Sorbitol to end. Sorbitol is used as a lower calorie sugar substitute

sweetener, used in diet sugar substitutes . The company has a capacity of 8ktons per annum ready to operate once the 24 months shelf test period is finalized

prior to 2010 end, with an estimated price per ton of EGP3.5k.

In 2009, National Maize revenues declined 3.5% compared to the previous year,mainly due to edible corn oil, one of its secondary products, witnessed a 45%decline in price in 2009. However, cheaper input prices resulted in EBITDAand net income to expand 41% and 73% in 2009 respectably compared to2008. During Q1 2010, revenues grew 4.2% on a yoy basis as prices and vol-umes remained relatively stable compared to Q1 2009. However, again lowerinput prices supported EBITDA growth of 17%. The improved EBITDA, inaddition to lower debt related expenses boosted net income by 34% in Q1 2010.

We project the added capacitates in corn grinding and starch, in addition tocommencing selling Sorbitol to support revenues increasing by 8% and 28%

in 2010 and 2011 respectively. We opted to reduce EBITDA margin in 2010 to22% compared to Q1 reported 26% rate to hedge against any unforeseen rawmaterial price correction. Furthermore, we project bottom line to expand at a

CAGR of 8% over the forecasted period.

We target to mix our research coverage between mainly the market heavyweights along with some small caps that can provide a good return. NationalMaize was picked for old school fundamental reasons, it is trading on lowearning multiples and a high dividend yield. Furthermore, it is expanding itsproduction capacity while currently operating over full capacity, which bodedgood on our DCF model that gave us a value for the companys equity of

EGP674 million or EGP23/share.

The main risks on National Maize, are fluctuations in corn commodity prices

and in foreign currency exchange rates, both can result in changes in NationalMaizes operating costs and margins along with the risk of new entrants to its

local market.

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BUY

Market Price (EGP/share) 13.7

Target (EGP/share) 22.8

Upside 67%

Reuters Codes NCMP.CA

Full Name: National Company for Maize Products

Short Name National Maize

Exchange Listing EGX

Index Inclusion EGX70

Number of shares (mn) 30

Market cap (EGP mn) 404.6

EV 2010 (EGP mn) 486.3

52 Week Low-High (EGP) 13.7/35.0

Average Daily Volume (52 weeks) 402,272

Stock Performance Absolute / Relative to index

Three month -33%/-5%

Six month -35%/-18%

One year -41%/-29%

Shareholders Ownership stake

Other Investors 14%

Free Float 34%

National Development Bank 9%

Bank Misr 43%

FY ending Dec. 2009a 2010e 2011f 2012f

Revenues (EGP mn) 550 593 759 802

EBITDA Margin 22.2% 21.6% 19.7% 19.3%

EPS (EGP) 2.11 2.45 2.64 2.78

DPS (EGP) 1.85 2.00 2.33 2.46

PER 6.5x 5.6x 5.2x 4.9x

DY 13.5% 14.6% 17.0% 17.9%

EV/EBITDA 3.6x 3.8x 3.2x 3.1x

Net Debt (EGP mn) 91 130 131 130

Analyst: Mohamed Fahmy

Email : [email protected]

Mobile: +2012 2157312

National Ma ize S hare P rice (EGP )

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JAZIRA SECURITIES BROKERAGEJuly 06, 2010


Fructose corn syrup defined

High-fructose corn syrup (HFCS) maize syrup, or glucose-fructose syrup comprises any of agroup of corn syrups that has undergone enzymatic processing to convert its glucose into fruc-tose and has then been mixed with pure corn syrup (100% glucose) to produce a desired sweet-ness. Consumer foods and products typically use high-fructose corn syrup as a sugar substitute.It has become very common in processed foods and beverages, including soft drinks, yogurt,

industrial bread, cookies, salad dressing, and tomato soup.

The most widely used varieties of high-fructose corn syrup are: HFCS 55 (mostly used in softdrinks), approximately 55% fructose and 45% glucose; and HFCS 42 (used in many foods and

baked goods), approximately 42% fructose and 58% glucose.

HFCS is among the sweeteners that have partially replaced sucrose (table sugar), as HFCS is

considered a cost-efficient sweetener for many food and drink applications.

Critics of the extensive use of HFCS in food sweetening argue that the highly processed sub-stance is more harmful to humans than regular sugar. Some restaurants in the USA and Europenow boast that they went back to normal sugar versus fructose based, but it is mostly a fashiontrend, with no conclusive proof that fructose causes obesity more than sucrose based sweeten-

ers.

Sugar & maize prices

Maize and sugar prices have relatively no relationship, with their correlation less than 50%.However, since for National Maize which produces a sugar supplement and its selling pricesmay get influenced by sugar prices, while it depends on corn for raw materials this weak corre-lation may pause a risk of a margin squeeze.

EU import sugar prices have fallen around 10%, while global sugar prices fell nearly 40% sincethe beginning of the year on the back of forecasted expansion in production following sugarprices more than doubling in 2009. Sugar prices soared in 2009 on the back of India, theworlds third sugar producer after Brazil and EU countries, having a shortage in production in2009 as a result of crop low yield and poor rainy season.

Maize price on the other hand remained stable over the first 5 months of 2010, while have in-creased only 5% in all of 2009.

However, Maize have already corrected significantly from its peak of US$290/ton in June 2008

to its long term support level of US$150/ton reached by December 2008.

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Corn syrup is in carbonateddrinks, processed foods, yo-gurt, bakeries, and confection-ary productsFructose 55 used in sodadrinks, while 42 is used inbaked goodsCorn syrup competes withsugar

Maize & sugar commodityprices have low correlation,but National Maize productsdo relatively compete withsugarSugar prices witnessed nearly40% decline since the begin-ning of the year

Maize remained stable whichmay create some pressures onNational Maize to reduce or atleast stabilize prices

Source: IMF

US Yellow Corn vs. Global Sugar Prices Relative Performance

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Egypt sugar profile & outlook

Egypt has consumed 2.6 million tons of sugar in 2009, while produced 1.7 million tons, theremaining 910k tons were procured through imports.

Sugar consumption is driven by population growth, and is forecasted to continue growing mod-

estly. Per capita sugar consumption in Egypt is about 33kg/year. In 2008, the GOE increasedthe quantity of subsidized sugar distributed under the national ration system. As a result, 900ktons of refined sugar is targeted for distribution under the ration system, compared to the 450kin the past several years.

Egypts total sugar imports in 2009 were about 35% lower than previous year, which wasmainly due to increased imports in 2008 as a result of defaults and low international sugarprices. The expected increase in sugar imports in FY11 is mainly due to meet the population-growth. Of the 910k tons imported in 2009, only 94.3k tons were refined sugar, a 30% decreasefrom imported of 2008. The average import price for FY09 for white sugar and raw sugar wereUS$630/ton and US$530/tons, respectively compared to US$470/ton and $350/ton in the previ-ous year respectively.

The current import tariff on white sugar and raw sugar are 10% and 2%, respectively. In addi-

tion, the government imposes an import fee of LE 500/ton on white sugar as a protection for thelocal industry.

Sugar extracted from sugar cane represented 57% of the countries production in 2009, whilesugar from beet and corn represented 34% and 9% respectively.

Egypt sugar production is expected to grow by over 12% from 2010 to 2014 driven by expand-ing the sugar beet cultivated areas and improved sugar cane crop yield. Furthermore, over thesame period consumption is expected to grow by around 3% with a significant portion of theconsumption going to the mass soft drinks and confectionary industries market. The main con-cern over the forecasted period is that if sugar prices return to its 2009 highs or further, theremay be some slowdown in consumption compared to our forecast specially if economic slow-

down continues.

It is worth nothing that National Maize is the sole producer of fructose based sweetener inEgypt. The fructose based sweetener targets mass market carbonated companies and confection-aries, which would make the company products less vulnerable than if it targeted the marketshigh end, in the case of corn price increase and/or a continued economic slowdown.

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Egypt imports 35% of its sugarneedsGovernment expanded sugarsubsidiesEgypt sugar imports in 2009were 35% less than 2008, dueto high inventory buildup in2008

Sugar from sugar cane repre-sents 57% of Egypts con-sumption, corn based represent9%The supply gap, promotes ex-pansion of sugar production,especially from sugar beets

National Maize is the soleproducer of HFCS in Egypt

Egypt Sugar data (000 tons) 2009e 2010e 2011f 2012f 2013f 2014f

Consumption 2,601 2,616 2,633 2,651 2,668 2,686

Production 1,691 1,742 1,778 1,820 1,866 1,913

Surplus (deficit) (910) (874) (855) (831) (802) (773)

Source: BMI Q1 2010 Food report


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Financial Assessment & Growth Drivers

Carbonated drinks contract provide stability but can pressure margins

National Maize revenues grew at a CAGR of 9% since 2005 to the end of 2009, while EBITDAmargins had an average of 19% and ranged from a minimum of 15% to a maximum of 22%.

We didn't receive enough explanation to these variations, however, we have done our analysisand came up with the following:

Since National Maize has been operating with Coca Cola and Pepsi Cola Egypt for a long time,prices are stable, changes when occur reflect significant changes in raw maize prices and rarelycorrelated to sugar prices. Although global sugar prices more than doubled in 2009, we see Na-tional Maizes fructose 55 selling prices have increased only 2% in each of 2009 and 2010.

However, having a yearly contract do has its negatives, since if corn prices increase signifi-cantly over the year, National Maize will not be able to pass the price increase prior to signingthe next contract the following year. This, in our opinion, is the main driver for the EBITDAvariation, as the company, margins can get squeezed or expanded depending on raw materialprices direction.

The other products, are the reason for the revenue fluctuation, for instance, it was a secondaryproduct, raw corn oil which mainly resulted in the 2009s 4% decline in revenues, as its pricedropped 45% during the year and resulted in the secondary products total revenue to decline byover 18% in 2009.

Furthermore, starch and glucose also declined during 2009, further illustrating that confection-ary products are more vulnerable to price changes than the carbonated drinks fructose 55 prod-uct, but we see it more related to Egypts economic conditions and its impact on local confec-

tionery products demand.

The cost predicament

Raw materials which are 96% maize and 4% enzymes represented 86% of National Maizesoperating costs, while salaries and energy each represented 5% of the cost.

We couldn't see a direct relation between maize and sugar prices or between National Maizeproducts prices and sugar as in both cases the correlation coefficient came below 50%.

We assumed price stability with minor growth in major products, on the long term, and that

EBITDA margin converge close to its historical average of 19% by 2013.

Strong first quarter, but we reduced the years outlook

National Maize reported a 4.3% increase in Q1 2010 revenues to EGP137.5 million up fromEGP131.9 million in the same quarter last year. However, as EBITDA margin improved signifi-cantly to 25.5% in Q1 FY10 up from 22.6% in 1Q FY09, EBITDA figure grew 17.4% toEGP35.1 million.

Although we didn't establish a correlation between sugar global prices and National Maizeproducts prices, we remain wary from the fact that sugar has reached a peak of US28 cents per

pound in January 2010 than took an aggressive downturn to reach US15 cents by end of May2010. However, maize remained stable. Will the sugar price slide put downward pressure onselling prices? We should have factored it in products prices, but no proof until now that Na-tional Maize products have corrected. We preferred that we take the side of caution, and

squeeze the margins.

New capacities boost revenues in late 2010 & 2011

Ultimately, we project revenues to grow 7.9% in 2010 supported by the new grinding capacitycoming online in the years last quarter, and we project 28% revenue growth in 2011, as thenew grinding capacity will operate from the years start in addition to the introduction of Sorbi-tol also early in 2011.

But EBITDA to grow at milder rates

As we mentioned above, we remained squeezing margins until it reached 18.2% in 2015, inorder to hedge for the risk of higher cost levels that the company wouldn't be able to pass to itscustomers. This resulted in that we projected EBITDA to grow by 5.0% and 17% in 2010 and2011 respectively.

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EBITDA margins vary signifi-cantly depending on local eco-nomic conditions and maizepricesSoda carbonated companiessign a yearly contractThe drawback is that the com-pany cant pass any corn pricehike to the soda companiesduring the yearNo contracts with National

Maizes other customersEdible corn oil prices dropped45% in 2009We opted to bring downEBITDA margins to its 5 yearaverage down from its rela-

tively high levels nowEBITDA margin peaked at26% in Q1 2010 up from 23%in Q1 2009We reduced our projected endof year EBITDA margin to22% just in case the sugar

slide impact National Maizeconfectionary pricesNew capacitates and productsto boost revenues by 8% and28% in 2010 and 2011 respec-tivelyWe gradual ly reduced

EBITDA margin to 18.2% by2013


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Financial Assessment & Growth Drivers (continued)

Interest expense to increases in FY11

In order to finance the capital expansions and the increased working capital requirements due tohigher raw corn inventory following the completion of the storage silos construction, NationalMaize will require relatively higher leveraging. National Maize has during Q1 FY10, with-

drawn most of its Bank Misrs loan, which stood at EGP42.5 million at the end of March 2010versus EGP25.1 million at the end of December 2009. The loan will be paid over 10 quarterlyinstallments starting January 2011, and the loan has an interest rate of 9.5% per annum.

As Bank Misrs loan has an interest payment grace period until the beginning of October 2010and the need for financing higher working capital requirements, further through short term debtfacilities, will not emerge prior to September, we expect National Maize interest expense to fall

significantly in 2010, but will increase again in 2011.

Net Income to witness a strong boost in 2010 from lower interest

As mentioned in the interest bearing debt section, lower interest expense in FY10, will result inthe 5% increase in EBITDA to be transformed to 16% increase in the years bottom line. By thesame token, in FY11, the higher interest expense from paying interest on the Bank Misrs loan

all year round, and working capital requirements increase which will result in short term debtexpanding will swallow a portion of the EBITDA growth, as FY11 EBITDA is expected to

grow by 17%, but net income is expected to grow only by 7.2%.

Dividends

National Maize had an average payout ratio of 91% of its net attributable income over the pastthree years. We assumed a lower rate of 82% in 2010 as the company may need to retain somecash for its expansions and inventory buildup following the storage silos coming into operation.

Starting 2011, we assumed a payout ratio to reach the levels of 2009 of 88%.

The company declared a cash dividend of EGP1.85/share for the fiscal year 2009, with a recorddate of June 21, 2010. The cash dividend will be paid on two equal installment of EGP0.92/share each. The first installment was distributed on June 24, 2010, while the second installment

will be paid on Nov 30, 2010.

It is worth noting that the board and employees have over the past five years received on aver-

age 17% of each years net profit in the shape of annual profit share.

Valuation

Based on the said assumption, we have utilized the discounted cash flow model to discount Na-tional Maizes operating cash flow, while utilizing a cost of equity of 14.7% based on a risk freerate of 8.75%, a market risk premium of 8.5% over the RFR and a beta of 0.7x along with a

perpetual growth rate of 3%.

The company beta in relation to the Egyptian stock market is actually below the 0.5x, however,we opted to increase the beta to factor for the companys short active trading history and theuncertainty regarding National Maizes operating margins.

The DCF model yielded a National Maize shareholders equity value of EGP674 million, or

EGP22.8/National Maizes share.

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Bank Misr loan has a graceperiod ending October 2010Lower interest expense inFY10, due to loan interestexpense grace period most ofthe year to push bottom line

16% up in 2010Q1 2010 witnessed a 4% in-crease in revenues, whileEBITDA spiked by 17%driven by lower operating ex-penses.Q1 2010 bottom line soared

34% driven by higherEBITDA margin and lowerinterest expenseNational maize has historicallydistributed over 90% of itsattributable income

Companys beta is signifi-cantly low, but due to its linkto commodity prices, smallactive trading history andmoderate transparency, weincreased beta from below0.5x to 0.7x

Q1 ending March Income StatementFigures are in EGP mn

2009 2010 Change

Revenues 131.9 137.5 4.2%

Local sales 131.6 137.0 4.1%

Export 0.3 0.5 45.8%

EBITDA 29.9 35.1 17.4%

EBITDA Margin 23% 26% 12.6%

Depreciation (5.2) (5.2) 0.5%

Net Interest (2.0) (0.6) -70.4%

NPBT 22.8 29.3 28.8%

Taxes (5.4) (5.9) 10.5%

Net Income 17.4 23.4 34.4%

Source: National Maize financials


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National Maize KPIs & Assumptions 2007a 2008a 2009a 2010e 2011f 2012f 2013f 2014f 2015f

Grinding Capacity (tons k) 240 240 240 270 330 330 330 330 330

Increase in capacity - - - 13% 22% 0% 0% 0% 0%

Actual Grinding (tons k) 255 246 259 284 347 350 353 356 356

Utilization 106% 103% 108% 105% 105% 106% 107% 108% 108%

Production Distribution

Fructose 55 38.9% 41.7% 43.0% 44.0% 45.0% 46.0% 47.0% 47.0% 47.0%

Fructose 42 12.8% 12.2% 13.0% 13.0% 13.0% 13.0% 13.0% 13.0% 13.0%

Starch 24.2% 23.1% 22.0% 25.0% 27.0% 30.0% 30.0% 30.0% 30.0%

Glucose 24.2% 23.1% 22.0% 18.0% 13.5% 8.5% 6.6% 6.6% 6.6%

Sorbitol 0.0% 0.0% 0.0% 0.0% 1.5% 2.5% 3.4% 3.4% 3.4%

Total 100% 100% 100% 100% 100% 100% 100% 100% 100%

Primary Products Volumes (tons k)

Fructose 55 80.9 80.3 88.7 99.8 124.7 128.7 132.8 134.0 134.0

Fructose 42 26.6 23.6 26.8 29.5 36.0 36.4 36.7 37.1 37.1

Starch 43.1 44.1 44.0 47.3 62.4 70.0 70.6 71.3 71.3

Glucose 41.9 37.1 37.8 34.0 31.2 19.8 15.5 15.7 15.7

Sorbitol 0.0 0.0 0.0 0.0 3.5 5.8 8.0 8.1 8.1

Total 192 185 197 211 258 261 264 266 266

Secondary Products Volumes (tons k)

Gluten Meal 60% 10 10 9 10 13 13 13 13 13

Gluten Meal 16% 50 48 50 55 67 67 68 69 69

Crude Corn Oil 6 6 6 6 8 8 8 8 8

Maize residue 6 5 7 7 9 9 9 9 9

Total 72 68 72 79 96 97 98 99 99

Secondary % of Grinding Volumes 28% 28% 28% 28% 28% 28% 28% 28% 28%

Prices (EGP)

Fructose 55 1,816 1,933 1,971 2,001 2,041 2,081 2,123 2,166 2,209

Fructose 42 1,833 2,017 2,120 2,438 2,584 2,739 2,903 3,077 3,262

Starch 2,555 3,038 2,797 2,517 2,643 2,775 2,914 3,059 3,212Glucose 2,415 3,020 2,555 2,299 2,414 2,535 2,662 2,795 2,935

Sorbitol 3,500 3,605 3,713 3,825 3,939

Gluten Meal 60% 2,515 3,302 3,523 3,699 3,884 4,079 4,283 4,497 4,722

Gluten Meal 16% 803 1,216 1,004 853 862 870 879 888 897

Crude Corn Oil 4,599 7,287 4,037 4,501 5,018 5,596 6,239 6,957 7,757

Maize residue 931 1,273 891 899 908 918 927 936 945

Primary Products Sales Value (EGP mn)

Fructose 55 147 155 175 200 255 268 282 290 296

Fructose 42 49 48 57 72 93 100 107 114 121

Starch 110 134 123 119 165 194 206 218 229

Glucose 101 112 97 78 75 50 41 44 46

Sorbitol 0 0 0 0 12 21 30 31 32Total 407 449 451 469 600 633 665 697 724

Secondary Products Sales Value (EGP mn)

Gluten Meal 60% 25 31 33 38 49 52 55 59 62

Gluten Meal 16% 40 58 50 47 57 59 60 61 62

Crude Corn Oil 29 42 24 29 40 45 50 56 63

Maize residue 5 6 6 7 8 8 9 9 9

Total 99 138 113 121 155 164 174 185 195

Primary Products Sales Value (EGP mn) 407 449 451 469 600 633 665 697 724

% of Total Sales 83% 79% 83% 80% 80% 79% 79% 79% 79%

Secondary Products Sales Value (EGP mn) 99 138 113 121 155 164 174 185 195

Total Sales Value (Adjusted) (EGP mn) 490 569 546 589 755 797 839 882 919

Source: National Maize & Jazira Capital estimates and forecasts





Utilization 106% 103% 108% 105% 105% 106% 107% 108% 108%


Fructose 55 38.9% 41.7% 43.0% 44.0% 45.0% 46.0% 47.0% 47.0% 47.0%

Fructose 42 12.8% 12.2% 13.0% 13.0% 13.0% 13.0% 13.0% 13.0% 13.0%

Starch 24.2% 23.1% 22.0% 25.0% 27.0% 30.0% 30.0% 30.0% 30.0%

Glucose 24.2% 23.1% 22.0% 18.0% 13.5% 8.5% 6.6% 6.6% 6.6%

Sorbitol 0.0% 0.0% 0.0% 0.0% 1.5% 2.5% 3.4% 3.4% 3.4%

Total 100% 100% 100% 100% 100% 100% 100% 100% 100%


Fructose 55 80.9 80.3 88.7 99.8 124.7 128.7 132.8 134.0 134.0

Fructose 42 26.6 23.6 26.8 29.5 36.0 36.4 36.7 37.1 37.1

Starch 43.1 44.1 44.0 47.3 62.4 70.0 70.6 71.3 71.3

Glucose 41.9 37.1 37.8 34.0 31.2 19.8 15.5 15.7 15.7

Sorbitol 0.0 0.0 0.0 0.0 3.5 5.8 8.0 8.1 8.1

Total 192 185 197 211 258 261 264 266 266


Gluten Meal 60% 10 10 9 10 13 13 13 13 13

Gluten Meal 16% 50 48 50 55 67 67 68 69 69

Crude Corn Oil 6 6 6 6 8 8 8 8 8

Maize residue 6 5 7 7 9 9 9 9 9

Total 72 68 72 79 96 97 98 99 99

Secondary % of Grinding Volumes 28% 28% 28% 28% 28% 28% 28% 28% 28%

Prices (EGP)

Fructose 55 1,816 1,933 1,971 2,001 2,041 2,081 2,123 2,166 2,209

Fructose 42 1,833 2,017 2,120 2,438 2,584 2,739 2,903 3,077 3,262

Starch 2,555 3,038 2,797 2,517 2,643 2,775 2,914 3,059 3,212Glucose 2,415 3,020 2,555 2,299 2,414 2,535 2,662 2,795 2,935

Sorbitol 3,500 3,605 3,713 3,825 3,939

Gluten Meal 60% 2,515 3,302 3,523 3,699 3,884 4,079 4,283 4,497 4,722

Gluten Meal 16% 803 1,216 1,004 853 862 870 879 888 897

Crude Corn Oil 4,599 7,287 4,037 4,501 5,018 5,596 6,239 6,957 7,757

Maize residue 931 1,273 891 899 908 918 927 936 945


Fructose 55 147 155 175 200 255 268 282 290 296

Fructose 42 49 48 57 72 93 100 107 114 121

Starch 110 134 123 119 165 194 206 218 229

Glucose 101 112 97 78 75 50 41 44 46

Sorbitol 0 0 0 0 12 21 30 31 32Total 407 449 451 469 600 633 665 697 724


Gluten Meal 60% 25 31 33 38 49 52 55 59 62

Gluten Meal 16% 40 58 50 47 57 59 60 61 62

Crude Corn Oil 29 42 24 29 40 45 50 56 63

Maize residue 5 6 6 7 8 8 9 9 9

Total 99 138 113 121 155 164 174 185 195


% of Total Sales 83% 79% 83% 80% 80% 79% 79% 79% 79%







Utilization 106% 103% 108% 105% 105% 106% 107% 108% 108%


Fructose 55 38.9% 41.7% 43.0% 44.0% 45.0% 46.0% 47.0% 47.0% 47.0%

Fructose 42 12.8% 12.2% 13.0% 13.0% 13.0% 13.0% 13.0% 13.0% 13.0%

Starch 24.2% 23.1% 22.0% 25.0% 27.0% 30.0% 30.0% 30.0% 30.0%

Glucose 24.2% 23.1% 22.0% 18.0% 13.5% 8.5% 6.6% 6.6% 6.6%

Sorbitol 0.0% 0.0% 0.0% 0.0% 1.5% 2.5% 3.4% 3.4% 3.4%

Total 100% 100% 100% 100% 100% 100% 100% 100% 100%


Fructose 55 80.9 80.3 88.7 99.8 124.7 128.7 132.8 134.0 134.0

Fructose 42 26.6 23.6 26.8 29.5 36.0 36.4 36.7 37.1 37.1

Starch 43.1 44.1 44.0 47.3 62.4 70.0 70.6 71.3 71.3

Glucose 41.9 37.1 37.8 34.0 31.2 19.8 15.5 15.7 15.7

Sorbitol 0.0 0.0 0.0 0.0 3.5 5.8 8.0 8.1 8.1

Total 192 185 197 211 258 261 264 266 266


Gluten Meal 60% 10 10 9 10 13 13 13 13 13

Gluten Meal 16% 50 48 50 55 67 67 68 69 69

Crude Corn Oil 6 6 6 6 8 8 8 8 8

Maize residue 6 5 7 7 9 9 9 9 9

Total 72 68 72 79 96 97 98 99 99

Prices (EGP/ton)

Fructose 55 1,816 1,933 1,971 2,001 2,041 2,081 2,123 2,166 2,209

Fructose 42 1,833 2,017 2,120 2,438 2,584 2,739 2,903 3,077 3,262

Starch 2,555 3,038 2,797 2,517 2,643 2,775 2,914 3,059 3,212

Glucose 2,415 3,020 2,555 2,299 2,414 2,535 2,662 2,795 2,935Sorbitol 3,500 3,605 3,713 3,825 3,939

Gluten Meal 60% 2,515 3,302 3,523 3,699 3,884 4,079 4,283 4,497 4,722

Gluten Meal 16% 803 1,216 1,004 853 862 870 879 888 897

Crude Corn Oil 4,599 7,287 4,037 4,501 5,018 5,596 6,239 6,957 7,757

Maize residue 931 1,273 891 899 908 918 927 936 945


Fructose 55 147 155 175 200 255 268 282 290 296

Fructose 42 49 48 57 72 93 100 107 114 121

Starch 110 134 123 119 165 194 206 218 229

Glucose 101 112 97 78 75 50 41 44 46

Sorbitol 0 0 0 0 12 21 30 31 32

Total 407 449 451 469 600 633 665 697 724


Gluten Meal 60% 25 31 33 38 49 52 55 59 62

Gluten Meal 16% 40 58 50 47 57 59 60 61 62

Crude Corn Oil 29 42 24 29 40 45 50 56 63

Maize residue 5 6 6 7 8 8 9 9 9

Total 99 138 113 121 155 164 174 185 195


% of Total Sales 83% 79% 83% 80% 80% 79% 79% 79% 79%



Sales Growth 22% 16% -4% 8% 28% 6% 5% 5% 4%


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Figures are in EGP mn Income Statement 2008a 2009a 2010e 2011f 2012f 2013f 2014f 2015f

Revenues (including other revenues) 570 550 593 759 802 844 887 924

Growth 15.1% -3.5% 7.9% 28.0% 5.6% 5.3% 5.1% 4.2%

EBITDA 86 122 128 150 155 160 165 168

Growth -8.2% 41.1% 5.0% 16.9% 3.6% 3.2% 2.9% 2.0%

EBITDA Margin 15.1% 22.2% 21.6% 19.7% 19.3% 18.9% 18.5% 18.2%

Depreciation & Amortization (19) (21) (20) (24) (23) (23) (22) (22)

Reported EBIT 68 102 108 126 132 137 143 146

Non-Operating Items - - - - - - - -

Net Interest (9) (7) (2) (11) (11) (8) (6) (4)

Net Profit Before Tax 58 94 107 115 121 129 137 142

Income Tax (16) (20) (21) (23) (24) (26) (27) (28)

Net Profit After Tax 42 74 85 92 97 103 109 114

Extraordinary Items - - - - - - - -

Minority Interest - - - - - - - -

Net Income 42 74 85 92 97 103 109 114

Non-Appropriation Items (9) (11) (13) (14) (15) (16) (16) (17)

Net Attributable Income 34 63 73 78 82 88 93 97

EPS 1.1 2.1 2.4 2.6 2.8 3.0 3.1 3.3

Growth -14.1% 73.1% 16.1% 7.8% 5.4% 6.8% 5.8% 3.9%

Balance Sheet 2008a 2009a 2010e 2011f 2012f 2013f 2014f 2015f

Cash & Marketable Securities 20 69 53 65 72 73 84 93

Trade Receivables-Net 115 110 119 152 161 169 178 185

Inventory 54 60 74 102 124 130 137 142

Other Current Assets - - - - - - - -

Total Current Assets 189 239 245 319 356 372 399 421

Net Fixed Assets 424 407 492 478 465 453 442 431

Other LT Assets 32 66 - - - - - -

Non-Current Assets 456 473 492 478 465 453 442 431

Total Assets 645 711 737 797 821 825 840 852

Short Term Bank Debt & CPLTD 61 70 81 100 115 93 84 73

Account Payable 95 47 51 65 69 73 77 80

Dividends Payable 40 66 72 83 87 93 98 102

Other Current Liabilities 90 93 99 120 124 128 132 134

Total Current Liabilities 286 276 303 368 396 387 390 389

Long-Term Debt & Bonds - 25 30 14 - - - -

Other LT Liabilities 43 48 28 30 31 33 35 36

Non-Current Liabilities 43 73 59 44 31 33 35 36

Paid in Capital 220 295 295 295 295 295 295 295

Total Shareholders' Equity 317 362 376 385 394 405 415 427

Net Debt (adjusted with Div. Payable & Cash) 81 91 130 131 130 113 98 82

Working Capital (97) (37) (58) (49) (39) (15) 8 32

Free Cash Flow 2008a 2009a 2010e 2011f 2012f 2013f 2014f 2015f

NOPLAT 53 80 87 102 112 110 114 118

Depreciation 19 21 20 24 23 23 22 22

Gross Cash Flow 71 101 107 126 135 132 136 139

Gross Investments 13 (51) (138) (43) (35) (20) (21) (20)

Operating Free Cash Flow Excluding Intangibles 84 50 (31) 83 101 113 116 119

Investment in Goodwill & Intangibles - - - - - - - -

Operating Free Cash Flow Including Intangibles 84 50 (31) 83 101 113 116 119

Non -Operating Cash Flow (8) (79) 83 (4) (4) 3 (8) (5)Free Cash Flow 76 (29) 52 79 97 116 108 114

Historical & forecasted financials

Source: National Maize financials & Jazira Capital estimates and forecasts


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9

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National Maize Equity Research - Jazira Capital