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Investment case •Holds a strong market share in the mobile retail and distribution segment •One of the largest contact centers in Egypt •Sound footing in the IT segment •Penetrating new potential fields such as Smart Buildings and plastic recycling •Competition on all business levels •Vulnerable to low consumer confidence Upside Catalysts • Greater-than-expected pick-up in the handset market. • Rapid expansion in the land transportation segment should drive up return on investments. • Potential demand for new smart buildings in Egypt. Downside Risks • Possible reduction of the flow of foreign IT investments • RAYA slowed down investments in the new potential segments namely Smart Buildings and plastic recycling. • Poor waste collection points could deter the success of plastic recycling plant. • Increasing competition in the smart building field may lead to a lower occupancy rate for RAYA’s new planned buildings. Raya Holding (RAYA) Company Profile Raya Holding [RAYA] consists of four business segments: retail & distribution (c.77% of the company’s operations), IT, Contact Centre and newly- introduced Raya Smart Buildings. In 2Q10, RAYA launched its land transportation business targeting Egypt and Sudan. RAYA is also set to establish a new plastic recycling company (Bariq) in December 2011 in what will be the first of its kind in Egypt. RAYA is currently one of Egypt’s flagship CIT companies, commanding a large share of the local mobile distribution market and a broad share of the IT segment, offering a wide array of services. RAYA’s IT segment has a presence in Algeria, Nigeria, Saudi Arabia, the UAE and the US. As of 1Q11, the company had 33 outlets (up from 30 in Shareholder Structure • Medhat Khalil & family 20.5% • Free Float 60.9% • Financial Holdings International Ltd 12.0% • El- Tawil Family 5.4% • Public Sector 1.2% 52-Week Performance & (*EGX suspended between 27 th Jan – 23 rd Mar 2011) RAYA.CA/RAYA EY | Buy Recommendation | Moderate Risk | LTFV EGP11.7 | Target Price EGP5.5 | Analyst: Ingy El-Diwany Key Performance Indicators - 1,000 2,000 3,000 4,000 5,000 3.5 4.0 4.5 5.0 5.5 6.0 6.5 Jun-10 Aug-10 Oct-10 Dec-10 Mar-11 May-11 Shrs('000) EGP Volume RAYA EGX 30rebased EG P m n/FY E D ecem ber 2007a 2008a 2009a 2010a 2011e 2012e R evenue 2,273.0 2,176.1 1,869.7 2,553.9 2,326.7 2,643.2 G rowth R ate (% ) 37.6 -4.3 -14.1 36.6 -8.9 13.6 EB ITD A 110.4 137.7 86.2 138.4 92.1 123.8 G rowth R ate (% ) 44.9 24.7 -37.4 60.6 -33.4 34.4 EB ITD A m argin (% ) 4.9 6.3 4.6 5.4 4.0 4.7 NetIncom e 95.0 54.0 41.6 43.6 43.2 42.0 G rowth R ate (% ) 40.5 -43.2 -22.9 4.8 -0.9 -2.9 N etm argin (% ) 4.2% 2.5% 2.2% 1.7% 1.9% 1.6% PER 3.0x 5.2x 6.8x 6.5x 6.5x 6.7x P /BV 0.7x 0.6x 0.6x 0.5x 0.5x 0.5x EV/EB ITD A 5.1x 4.8x 5.5x 3.8x 6.7x 7.3x N etdebt/EB ITDA 2.5x 2.7x 2.3x 1.8x 3.6x 5.0x D ividend Yield 24.9% 4.6% 5.1% N/A 5.4% 5.2% S o urc e: C IC R D atabas e Sector: M edia & IT ISIN : EG S690C 1C010 LastP rice (EG P) 4.53 52 W eek H igh 6.25 52 W eek Low 3.57 100-dayA v. Volum e 240 (000' shares perday) N o. ofShares (m n) 62.2 M arketC ap (EG Pmn 282 *P rices as atclose on 30th M ay2011
