MARKET TALK: HC Starts Juhayna At Overweight; Cites Value Discount

Tuesday, Jun 21, 2011

0640 GMT [Zawya Dow Jones]--HC Securities initiates coverage of Juhayna with an overweight rating and a target price of EGP7.02. "The stock is trading at discounts of 35% to peers," it says. "Key catalysts include higher than expected revenue growth, backward integration, and value accretive acquisitions," HC adds. Notes Juhayna deleveraging aided by IPO proceeds (about EGP999M) and limited debt needs in the short term, with the company expected to have a net cash position this year. HC says Juhayna managed to raise milk prices about 10% in May and is likely to raise juice and yogurt prices in 2H. "We believe competition is a long-term structural risk that could, however, help significantly expand the market in the medium term (especially in milk)," it says. Juhayna shares closed 0.5% down Monday at EGP5.57. (shereen.elgazzar@dowjones.com)

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21-06-11 0648GMT