Edita Food Industries - Re-initiation of Coverage - August 2016

PRIME INVESTMENT RESEARCH
AUTOMOTIVE |EGYPT
GB AUTO – INITIATION OF COVERAGE
JANUARY, 14TH
2016
FOOD & BEVERAGE |EGYPT
EDITA FOOD INDUSTRIES – RE-INITIATION OF COVERAGE
AUGUST, 3RD
2016
WE RE-INTIATE COVERAGE FOR EDITA FOOD INDUSTRIES
ASSIGNING A “SELL” RATING
 EGYPT’S LARGEST LISTED CONSUMER COMPANY BY
MARKET CAP.
 SECOND LARGEST DOMESTIC SNACKS PRODUCER WITH
C12% MARKET SHARE.
 A STRONG POSITION ACROSS ALL SEGMENTS, HAVING
THE LARGEST SHARE IN CROISSANTS AND CAKES, WHICH
CONTRIBUTE MORE THAN 80% OF REVENUES.
 HUGE GROWTH OPPORTUNITIES BACKED BY INTENSIVE
EXPANSION PLANS.
 SELLING ITS PRODUCTS TO 14 COUNTRIES IN THE MENA
REGION, WITH PARTICIPATES TO COVER FX
REQUIREMENTS.
 HUGE CAPEX BILL TO BENEFIT FROM THE UNTAPPED
GROWTH OPPORTUNITIES.
 COMPETITION FROM INTERNATIONAL AND REGIONAL
PLAYERS POSE A HUGE THREAT.
WE RE-INITIATE COVERAGE FOR EDITA FOOD INDUSTRIES AT A
FAIR VALUE OF EGP 10.43/SHARE IMPLYING A 28% DOWNSIDE
POTENTIAL.
HENCE, WE ASSIGN EFID A “SELL” RATING.

1
EDITA FOOD INDUSTRIES– RE-INITIATION OF COVERAGE
AUGUST, 2016
EDITA FOOD INDUSTRIES …
MASSIVE, YET EXPENSIVE EXPANSION OPPORTUNITIES TO COME …
S
Stock Data
Outstanding Shares [Mn] 725.4
Mkt. Cap [Bn] 10.489
Bloomberg – Reuters EFID EY, EFID.CA
52-WEEKS LOW/HIGH 13.11 – 19.99
DAILY AVERAGE TURNOVER (‘000S) 7,348.4
Ownership
Berco Ltd. 41.82%
Exoder Ltd. (Chipita) 12.98%
Africa Samba B.V. (Actis) 7.5%
Others (Free Float) 37.7%
Source: Bloomberg
ource: GB AUTO, Prime Estimates
“SELL”
MARKET PRICE EGP 14.50
FAIR VALUE EGP 10.43
POTENTIAL 28% DOWNSIDE
INVESTMENT GRADE
“VALUE”
Report Content:
- Valuation ………………..……………............ 2
- Financial Statements …………....................... 4
- The Egyptian Snacks Food Industry ……….... 6
- Edita Food Industries Co. ……..……………... 12
Source: Bloomberg
0
5
10
15
20
25
Aug-15
Sep-15
Oct-15
Nov-15
Dec-15
Jan-16
Feb-16
Mar-16
Apr-16
May-16
Jun-16
Jul-16
Aug-16
EFID.CA EGX 30 -Rebased
Source: Bloomberg
The valuation of Edita Food Industries’ stock – EFID.CA- is hit severely by the recent aggressive hikes
in the risk-free rates. We used an after-tax risk-free rate of 12.50%, yielding a value of EGP
10.43/share. Since the beginning of 2016, the returns on all government securities skyrocketed, making
most of the stocks’ valuation unappealing to investors; the 1-year post-tax yield rose by 310bps since
January 2016. If the 1-year after-tax risk-free rate at the beginning of 2016 – 9.62% - was used, Edita’s
stock would have a value of EGP 13.72/share.
The Egyptian snack foods market has experienced solid growth in the recent years, despite the
economic instability, reflected in a CAGR of 21% during 2010-2015. In 2010, the snacks market stood at
EGP 6.7bn, while it stood at 17.5bn in 2015. During the 2010-2015 period, all segments exhibited a
double-digit growth, yet croissants showed the highest CAGR of 34% during the same period. We
expect that the snacks market will reach EGP 21.3bn by 2016 and EGP 46.8bn by 2020. In the past
several years, the snacks industry has grown at a faster rate than the general F&B sector. The snack
foods market in Egypt is still relatively underdeveloped and underpenetrated, with average
consumption per capita standing at USD 25/annum, where more developed markets such as North
America, Europe and Latin America have much higher consumption per capita levels of USD 234, USD
228, and USD 78 /annum respectively.
Edita Food Industries – Edita- is a leader in the growing Egyptian packaged snack foods market. It is
considered the second largest domestic snacks producer with c12% market share and it is the largest
listed consumer company by market cap on the EGX. Edita markets, manufactures and distributes a
range of branded baked snack products including packaged cakes, croissants, rusks, wafers as well as
selected confectionary/candy products. Its local brand portfolio includes household names such as
Molto, Todo, Bake Rolz, Bake Stix, Freska and MiMix. Till 2014, it had the exclusive ownership of
selected international brands including Twinkies, HoHos and Tiger Tail “The HTT Brands” in 4
countries; namely Egypt, Libya, Jordan and Palestine. In 2015, it acquired the rights to its existing HTT
brands in additional 12 countries in the MENA region and it also acquired the technical assistance and
know-how to manufacture 11 new Hostess Brands LLC products. It currently holds the number one
market position in the core cakes segment (55.6%), number one market position in the croissants
segment (69.5%), and number two market position in the rusks segment (36.4%), number four market
position in the wafers segment (7.3%) and number two in the candy segment (11.2%). Edita’s products
are targeted towards a wide group of consumers in Egypt, both in terms of age and demographics, as
well as income, as it primarily targets the mass market for snacks.
Edita started off in 1997 with 1 production line and earned revenues of EGP 24mn and it reached 25
production lines and earned revenues of EGP 2,225mn by 2015. The company historically had to add
factories, production lines and overall production capacity to meet the growing demand and not to lose
any of it market shares. In 2016-2020 it is expected that Edita will add 10-11 new production lines,
increasing the production capacities by c50%. Edita has a very solid business model. Edita uses more
than 100 different raw materials, constituting more than 80% of the company’s COGS. Such diversity in
raw materials’ requirements reduces the short-term price fluctuations. Edita has a solid domestic
distribution network, which plays a very important role in the penetration of its products and
distribution across a wide geographical area. This gives Edita a competitive edge as having a solid
distribution network may act as barrier to entry for potential competitors. Edita tries to rationalize the
number of SKUs in order to achieve efficiencies while maintaining their consumers’ loyalty. The
company has undertaken many strategies in the past, referred to as “Covert Pricing Strategies”. These
strategies include: 1. introducing new products/flavors in existing segments at higher prices per pack, 2.
introducing new premium products, 3. higher pricing for disproportionately larger packaging, 4.
reducing the average weight per pack and 5. decrease the number of pieces per pack. Edita has a
diversified sales mix. By 1Q2016, Edita had 5,221 wholesale customers where they represented 55% of
the total revenues and it directly served 59,783 retail clients, where their sales represented 34% of
revenues. Edita plans that the retail would represent 50% of revenues by 2018 as the retail customers
are usually less price sensitive than wholesalers.

2
AUGUST, 2016
Edita operates on a Self-funded Working Capital, as more than 97% of sales are performed on cash basis (2014 & 2015). The cash is
collected at the time of sale and it is used to fund operations. The company is able to obtain favorable terms from suppliers and the raw
materials and the end products have relatively short lives and cannot be stored for long periods. Consequently, this makes the company
benefits from a “Negative Cash Conversion Cycle”; where the company has the ability to sell its products before paying its obligations.
In 2015, revenues grew by 16% y-o-y to reach EGP 2,225mn compared to EGP 1,919mn a year earlier. In 1Q2016, Edita’s revenues
dropped by 2%, standing at EGP 518.1mn versus EGP 528.9mn in 1Q2015. Cakes and croissants have always been the company’s main
contributors to revenues. Edita’s net profit rose by an enormous 31.3% in 2015, recording EGP 349.1mn, against EGP 265.9mn. The Net
Profit Margin improved in 2015 to reach 15.7%. In 1Q2016, net profit for the quarter dropped severely, recording EGP 32.7mn versus
EGP 59.5mn in 1Q 2015. The Net Profit Margin dropped severely to reach 6.3% against 11.2% a year earlier.
Valuation:
We initiate our coverage for Edita Food Industries with a “Sell” rating driven from a downside potential of 28%; driven from our
estimated Fair Value of EGP 10.43 Using the DCF valuation methodology for Edita, we utilized an average WACC over our forecasted
horizon of 15.58%, a risk free rate of 12.50%, and a market risk premium of 8%. We used the average F&B Sector Beta which is
equivalent to 0.6.
Discounted Cash Flow Model (DCF) Dec-16 Dec-17 Dec-18 Dec-19 Dec-20 Dec-21 Dec-22 Dec-23 Dec-24 Dec-25
NOPLAT 385,295 574,113 659,858 784,242 980,688
Depreciation 77,718 103,247 121,681 130,807 142,797
Gross Cash Flow 463,013 677,361 781,540 915,049 1,123,485
Change in Working Capital 43,393 36,163 34,815 36,240 34,745
Capex (444,902) (262,410) (116,682) (175,134) (150,781)
Free Cash Flow 61,503 451,114 699,672 776,154 1,007,450 1,088,046 1,175,089 1,269,096 1,370,624 1,480,274
1190% 633% 55% 11% 30% 8% 8% 8% 8% 8%
Terminal Value 14,439,823
Total Cash Flow 61,515 451,120 699,673 776,154 1,007,450 1,088,046 1,175,089 1,269,096 1,370,624 15,920,097
NPV 57,922 366,803 491,598 470,441 527,784 492,388 459,365 428,557 399,655 4,009,950
Value Of Operations 7,704,462
Add: Excess Cash 462,935
Entity Value 8,167,397
Less: Value of Debt 565,151
Less: Accum. Discounted
Minority Interest 35,892
Shareholder Value 7,566,354
DCF Value Per Share 10.43
Regarding perpetual growth rate, we applied a multiple-stage growth model:
- 2016 - 2020: we forecasted full financial statements, as the company will
witness hyper growth rates.
- 2021 - 2025: we assumed FCF to grow at a high rate of 8%.
- 2026 - Infinity: the terminal value of the company is based on a perpetual
growth rate of 5%.
Hyper
Growth
Stage
High Growth
Stage
8%
Sustainable
Growth
5%
2016-2020 2021-2025 2026-Infinity

3
AUGUST, 2016
SOURCE: BLOOMBERG
We believe that a multiple-stage growth model is more appropriate for sectors such as F&B and companies as Edita, as these sectors
and companies are expected to witness abnormal growth rates before achieving stable perpetual growth rates. Previously we indicated
that our assumed perpetual growth rate is capped by 5%, as it is correlated with Egypt’s real GDP growth rate, and hence we opted to
apply a multiple stage growth rate model for Edita.
The DCF Valuation for Edita is quiet unappealing as it entails a massive downside potential of 28%. Moreover, Peer Valuation would imply
that Edita is considered relatively overvalued and is currently trading at a premium. Edita has a higher Leading P/E ratio (30.17x) than its
global (17.76x) and regional (12.94x) peers. Using the leading P/E multiple for global peers, Edita’ FV would stand at EGP 8.52, implying a
41.2% downside potential. From the below table, we can see that the most of the F&B stocks in the EGX, including Edita are traded at a high
P/E ratios, regionally and globally. This can be attributed to the defensive nature of the sector that should be represented in the investors’
portfolios, especially in a country such as Egypt which is featured with strong domestic demand. Consequently, investors opt to allocate a
portion of their portfolios towards the F&B sector regardless of the upside potential driven from DCF method.
2015 - P/E 2016 - P/E 2015 - P/B 2016 - P/B
Median Global Food Producers 17.55 17.76 1.24 1.24
Median Regional Food Producers 13.30 12.94 1.21 1.19
Edita Food Industries – EFID 30.39 30.17 8.95 7.37
Value (EGP / Share) Downside Potential
100% DCF 10.43 -28%
100% P/E Multiple 8.52 -41%
50% DCF / 50% P/E Multiples 9.48 -35%
Upside Risks:
- Faster growth in the Egyptian snack foods market, while maintaining market shares.
- Gaining a larger market share in any/all of the segments.
- Faster than anticipated implementation of expansion plans.
- Successful price migration strategies and an improved product mix.
- Stronger than expected demand from export markets.
- Further softening in the costs of raw materials.
- Entering into a successful M&A transaction (either a target or an acquirer).
- Penetrating further regional and international markets.
Downside Risks:
- Inability to undertake the planned expansion plans.
- Losing market share in any/all of the segments to local/regional/international competitors.
- Increased consumer price sensitivity due to inflation and the deterioration of the macro-economic conditions.
- Unsuccessful SKU upsizing and unacceptance of higher priced SKUs.
- Higher than anticipated rise in costs of raw materials.
- Further devaluation of the EGP and FX exposure.
- Unsuccessful penetration in the new exports markets.

4
AUGUST, 2016
Financial Statements … Historical & Forecast
Income Statement Brief Hist. Forecast
In EGP Mn 2015 2016F 2017F 2018F
Revenues
2,225.4 2,760.1 3,428.8 3,957.7
Change
16% 24% 24% 15%
COGS
1,280.5 1,640.96 1,968.98 2,302.5
Change
13% 28% 20% 17%
Gross Profit
944.9 1,119.1 1,459.8 1,655.2
Depreciation & Amortization
76.8 77.7 103.2 121.7
EBITDA
496.5 585.3 854.5 989.8
Net Income (Before Minority Interest)
349.1 342.9 549.2 651.9
Net Income (After Minority Interest)
346.1 348.6 550.8 654.4
Net Attributable Income
335.7 338.1 534.3 634.7
NPM 15%
12% 16% 16%
Balance Sheet Brief Hist. Forecast
In EGP Mn 2015 2016F 2017F 2018F
Cash
462.9 191.5 366.9 669.02
Net Receivables
63.1 44.96 53.95 63.1
Net Inventory
140.3 178.8 214.6 250.9
Other Current Assets
4.7 4.5 5.4 6.4
Total Current Assets
671.1 419.9 640.88 989.4
Net PPE
1,143.5 1,549.7 1,747.9 1,781.9
Net Intangibles
161.97 161.97 161.97 161.97
Other LT-Assets
156.01 117.01 78.00 39.00
Total Long Term Assets
1,461.5 1,828.7 1,987.8 1,982.8
Total Assets
2132.6 2,248.6 2,628.7 2,972.2
Liabilities
STD - incl CPLTD
218.9 122.2 103.96 77.09
Accounts Payable
210.01 269.2 323.01 377.8

5
AUGUST, 2016
SOURCE: EDITA & PRIME ESTIMATES
Total Current Liabilities
498.5 465.3 528.9 583.2
Total Long Term Liabilities
459.3 356.8 291.5 257.4
Total Liabilities
957.8 822.1 820.4 834.7
Equity
Paid-in-Capital
72.5 72.5 72.5 72.5
Reserves
38.8 56.3 73.7 101.5
RE
1,057.7 1,297.7 1,669.3 1,978.8
Total Equity
1,174.8 1,426.4 1,808.3 2137.4
Financial Ratios Hist. Forecast
GPM 42% 41% 43% 42%
EBITDA 22% 21% 25% 25%
NPM 15% 12% 16% 16%
EPS 0.48 0.48 0.77 0.91
DPS 0.22 0.22 0.42 0.59
P/E 30.39 30.17 18.91 15.93
EV/EBITDA 21.5 18.3 12.2 10.2
ROA 17.97% 15.44% 22.13% 22.86%
ROE 30.48% 24.02% 31.18% 30.43%
Debt/Equity 44.91% 36.56% 31.21% 28.08%
Total Assets Turnover 1.19 1.24 1.41 1.41

6
AUGUST, 2016
SOURCE: BLOOMBERG
SOURCE: CBE, PRIME RESEARCH, BMI, EDITA FOOD INDUSTRI
EGYPTIAN SNACK FOODS MARKET
BLOOMBERG WORLD FOOD INDEX BLOOMBERG GLOBAL SNACKS VALUE INDEX
The Egyptian Snack Foods Industry:
The Egyptian snack foods market has experienced solid growth in the
recent years, despite the economic instability, reflected in a CAGR of
21% during the period 2010-2015. In 2010, the snacks market stood
at EGP 6.7bn, while it stood at EGP 17.5bn in 2015. During the 2010-
2015 period, all segments exhibited a double-digit growth, yet
croissants showed the highest CAGR of 34% during the same period.
Based on the historical CAGR, it is expected that the snacks market
will reach EGP 21.3bn by 2016 and EGP 46.8bn by 2020. The Food &
Beverage is one of the sectors that have proven to be solid and
resilient since 2011, showing a steady growth rate, unlike most of
the other sectors which witnessed a slowdown due to the political
and economic instability. The consumption of food & beverage stood
at EGP 255.6bn in 2011 and it reached EGP 430.7bn in 2015, showing
a CAGR of 14%. The sector in general outpaced the growth in real
GDP during the same period, which was around 2.5%. It is worthy to
note that the snacks industry has even grown at a faster rate than
the general food & beverage sector.
6.7
8.1
11.7
13.1
14.918
17.506
20.9%
44.4%
12.0% 13.9%
17.3%
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
0.4
0.45
0.5
0
2
4
6
8
10
12
14
16
18
20
2010 2011 2012 2013 2014 2015
Snacks Market - EGP bn y-o-y Growth Rate (%)
FY2011 FY2012 FY2013 FY2014 FY2015
GDP at market prices- EGP Bn 1,371.8 1,576.0 1,843.8 2,101.9 2,429.8
Real GDP Growth (%) 1.80% 2.20% 2.10% 2.20% 4.20%
CY2011 CY2012 CY2013 CY2014 CY2015
Food Market - EGP Bn 255.6 299.1 334.9 377.9 430.7
Growth Rate (%) 14.11% 17.00% 11.99% 12.83% 13.96%
Snacks Market - EGP Bn 8.1 11.7 13.1 14.9 17.5
Growth Rate (%) 20.90% 44.44% 11.97% 13.89% 17.36%
The snack industry growth rates exceeding the growth of the general F&B sector is not only a local phenomena, it is in fact a global one.
During the past few years, the snacks industry has grown at a faster rate than that of the F&B sector and this trend is expected to persist. It
is expected that the global market for snacks will reach USD 630bn by 2020, where between 2013 and 2014, consumers around the world
spent USD 374bn on snack foods annually. During the period 2010-2015, The Bloomberg World Food Index showed a CAGR of 9%, where
the Bloomberg Global Snack Value Index grew at a CAGR of 24%.
0
50
100
150
200
250
01-01-2010
01-07-2010
01-01-2011
01-07-2011
01-01-2012
01-07-2012
01-01-2013
01-07-2013
01-01-2014
01-07-2014
01-01-2015
01-07-2015
01-01-2016
01-07-2016
20
40
60
80
100
120
140
01-01-2010
01-07-2010
01-01-2011
01-07-2011
01-01-2012
01-07-2012
01-01-2013
01-07-2013
01-01-2014
01-07-2014
01-01-2015
01-07-2015
01-01-2016
01-07-2016

7
AUGUST, 2016
SOURCE: CBE, CAPMAS
SOURCE: NIELSEN GLOBAL SNACKING REPORT
DEMOGRAPHICS PROFILE
POPULATIONS IN THE MENA COUNTRIES (MN.)
USD Bn %
Europe 167 45%
North America 124 33%
Asia Pacific 46 12%
Latin America 30 8%
Middle East & Africa 7 2%
Total
374 100%
In 2013-2014, Europe represented the largest snacks market worldwide
with a 45% share followed by North America with a share of 33%. Even
though the sales value in the regions of Asia Pacific, Latin America and the
Middle East & Africa are quiet lower than those in Europe and North
America, annual growth rates in the last several years have been much
higher in these regions. The growth in the global snacks market will be
mainly driven by the developing countries, due to the surging urbanization
rates, growing per capita income and the changing food cultures.
In Egypt, the demographic profile is very appealing for the food and
beverage industry generally and specifically the snack foods industry. Egypt
is the most populous country in the MENA region, with a population that
currently stands at 91.5mn. Population figures have shown an average
annual increase of 2.5% during 2010-2015. Egypt has one of the world’s
most youthful populations, where approximately 60% is under the age of 30
and only 5% is above the age of 60. This extremely young and dynamic
population gives the country’s future prospects an undeniable strength.
Also, Egyptians tend to spend around 40% of their income on food items,
which makes it the highest expenditure group for the average Egyptian
household.
However, more than 50% of the Egyptians are considered poor, low-income
consumers and hence they are price-sensitive. The slowly-yet-improving
income levels and the rapid urbanization, more time spent away from
home, longer commutes, the increase in the number of women joining the
labor force and growing number of students in schools and universities
have affected the consumption patterns towards packaged food and
packed snacks specifically.
Moreover, the snack foods market in Egypt is still relatively underdeveloped
and underpenetrated, with average consumption per capita standing at
USD 25/annum, where more developed markets such as North America,
Europe and Latin America having much higher consumption levels of USD
234, USD 228, and USD 78 /annum respectively. On the other hand, there
are many obstacles that hindered the profitability of snack producers. The
main difficulties that snack producers faced in the past were the reliance on
imported raw materials, such as flour, sugar, cocoa, oils which are all known
to have very volatile prices. Also, snack producers have been challenged in
recent years to maintain their margins, due to the economic slowdown and
the EGP devaluation. Most of the producers have resisted raising their
product prices, fearing that consumers will either switch to cheaper brands
or stop buying altogether. Consequently, many companies slightly reduced
their SKU sizes or cut down on the fillings, or purchased raw materials from
other suppliers with lower-quality materials.
0
20
40
60
80
100
92
79 79
40 36 34 32
11 9 8
0-14 Years
, 31%
15-24
Years, 20%
25-54
Years, 39%
55-64
Years, 6%
65+ Years,
4%
0-14 Years
15-24 Years
25-54 Years
55-64 Years
65+ Years
Annual Average of Household Expenditure
by Expenditure Groups %
Food & Non-Alcoholic Beverages 38%
Alcoholic Beverages & Tobacco 4%
Clothing & Footwear 5%
Housing, Electricity, Water, Gas & Other
Fuels 18%
Furniture & Equipment 4%
Health 9%
Transport 5%
Communication 2%
Recreation & Culture 2%
Education 4%
Restaurants & Hotels 4%
Others 3%

8
AUGUST, 2016
SOURCE: NIELSEN GLOBAL SNACKING REPORT
SOURCE: IPSOS TRACKER
WHERE PEOPLE EAT SNACKS INSTEAD OF "BREAKFAST" WHERE PEOPLE EAT SNACKS INSTEAD OF "LUNCH"
WHERE PEOPLE EAT SNACKS INSTEAD OF "DINNER"
It is worthy to note that a growing percentage around the world would choose to eat a snack instead of eating breakfast, lunch or
dinner. Egypt was found to be one of the top countries, where people would prefer to snack over having a real meal, especially
breakfast.
72%
67%
67%
63%
62%
62%
62%
50% 55% 60% 65% 70% 75%
India
UAE
Egypt
Saudi Arabia
Russia
Brazil
Mexico
61%
61%
58%
57%
56%
53%
53%
50% 55% 60% 65%
India
UAE
Turkey
Mexico
Egypt
Pakistan
Brazil
65%
62%
61%
60%
57%
56%
53%
50% 55% 60% 65% 70%
Egypt
India
Brazil
UAE
Mexico
Indonesia
Venezuela
Product Past Month Consumption
Cakes 96%
Wafers 95%
Potato Chips 95%
Sweet Croissants 93%
Corn Tortilla 84%
Chocolate 82%
Baked Wheat 80%
Biscuits 78%
Savory Croissants 68%
Gum 63%
Ice Cream 57%
Candy 51%
Filled Biscuits 45%
Brownies 7%
Donuts 2%
According to IPSOS, consumption patterns in Egypt are characterized by the
consumption of multiple brands, consuming an average of 4-5 times / week and
consuming different 5-6 categories / week. This resembles that consumers do
not possess any loyalty to any specific category / product. The product
penetration is different across all categories, with Wafers, Potato Chip, Cakes
and Sweet Croissants are among the highest categories with respect to the
penetration. The snacks industry can be divided into 4 quadrants; Mass,
Dormant, Green field and Niche. The “Mass” quadrant - which has most of the
snack categories - is characterized by a high penetration level and consumption
with high consumption frequency.

9
AUGUST, 2016
SOURCE: NIELSEN RETAIL AUDIT. APRIL 2016
SOURCE: NIELSEN
MARKET STAGES BY PRODUCT TYPE
AVERAGE SKU PRICES BY PRODUCT SEGMENT (EGP)
Low affordability levels and price sensitivity have a huge impact on consumer choices among different snacks, where consumers would
go more for affordable snacks, with SKUs prices between EGP 0.8 (USD 0.11) and EGP 1.2 (USD0.17) per SKU, according to Neilsen.
2010 2011 2012 2013 2014
Croissants 0.8 0.9 1.1 1.2 1.2
Wafers 0.4 0.5 0.7 0.7 0.8
Salty Snacks 0.7 0.8 0.9 0.9 1.0
Cakes 0.5 0.6 0.8 0.8 0.8
The snack food market in Egypt is relatively underdeveloped, where it witnessed fast market growth and several new brands were
introduced to the market. The Egyptian shopping habits have changed to a large extent in the last decade; shifting from independent
small grocers to supermarkets and hypermarkets. As for snacks, the traditional sales channels – namely kiosks / “mom & pop” shops and
small groceries remain to dominate. Due to the favorable conditions in the local food market, including the snack market, regional and
international food/snack producers have shown interest in penetrating the Egyptian market. Some producers have penetrated the
market with their own brands, such as Mondelēz International (producing Tuc, Cadbury, Hallz, Oreo, Toblerone, Milky’s, Trident and
Tang), while others have acquired local brands, such as Kellog acquiring BiscoMisr and Mass Foods in 2015. Generally, local brands
perform better than imported products across most categories, mainly due to pricing and international companies being subjected to
import taxes, forcing them to price their products much higher than their locally produced counterparts.
7
6
5
4
3
2
1
0
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1
Penetrationof Category-Once per Month(% Mar -Sep2015)
Frequency-
Number of
Times
Consumedper
Week
Niche
GreenField Dormant
Mass
v
Gum
Candies
Donuts
Brownies
Lollipops
PotatoeChips
Cake
IceCream
Waffer
FilledBiscuits
SavoryPate/Croissant
Chocolate
BakedWheat
CornTortilla
SweetPate/ Croissant
Biscuits

10
AUGUST, 2016
CROISSANTS MARKET SHARES (%)
WAFERS MARKET SHARES (%)
RUSKS MARKET SHARES (%)
SOURCE: NIELSEN RETAIL AUDIT, APRIL, 2016
The Egyptian snack foods market is divided into 8 product categories; Packaged Croissants, Wafers, Chocolates, Salty Snacks, Cakes,
Biscuits, Candy and Gum.
Croissants:
- 5% of the Egyptian snack foods market in 2015.
- Value in 2015: EGP 860mn.
- Fastest growing product segment.
- 2010-2015 CAGR rate: 34%
- Concentrated and relatively young.
- Edita introducted the first branded product in 1997.
- Edita has the largest market share: 69.5% (as of April 2016).
Wafers:
- 10% of the Egyptian Snack food market in 2015
- Value in 2015: EGP 1.81bn.
- High growth due to frequent and high consumption patterns.
- 2010-2015 CAGR rate: 25%
- Dominated by 2 producers; Ocean Foods and El Shamedan.
- The remainder of the market is captured by small players.
- Highly fragmented.
- Minimal product differentiation.
Salty Snacks:
- Value in 2015: EGP 7.008bn.
- Highest contributor to the aggregate Egyptian snack food market.
- Relatively mature market, yet 2010-2015 CAGR of 18%
- Highly fragmented.
- Low barriers to entry.
o Rusks:
- Sub-product within the salty snacks category.
- In 2015, 4.6% of the salty snacks product segment.
- Value in 2015: EGP 322.4mn
- 2010-2015 CAGR rate: 33%
- Dominated by PepsiCo.(Chipsy) and Edita.
Edita - Molto,
70%
Al Faysal -
Brunch, 21%
Monginis -
Monginis, 4%
Faragello -
Faragello, 3% Others, 3%
Ocean Foods -
Lambada, 33%
El Shamadan -
El Shamadan,
22%
Nestle -
KitKat, 12%
Edita - Freska,
7%
Bisco Misr -
Bisco Wafers,
7%
PepsiCo
(Chipsy) -
Samba, 4%
Others, 15%
PepsiCo
(Chipsy) -
Sunbites, 64%
Edita - Bake
Stix and Rolz,
36%

11
AUGUST, 2016
CAKES MARKET SHARES (%)
CANDY MARKET SHARES (%)
SOURCE: NIELSEN RETAIL AUDIT, APRIL, 2016
Cakes:
- Value in 2015: EGP 1.699bn
- Relatively mature market – 2010-2015 CAGR rate: 23%
- Low market fragmentation.
- Edita has the largest market share: 55.6% (as of April 2016).
Candy:
- Value in 2015: EGP 584mn.
- Slowest segment of the snack food market.
- 2010-2015 CAGR rate: 14%
- Highly fragmented – 40 % captured by the small producers.
Chocolates, Biscuits and Gums:
- Chocolate market size in 2014: EGP 3.2bn
- Biscuits market size in 2014: EGP 1.7bn
- Gums market size in 2014: EGP 0.7bn
- 2010-2015 CAGR rate: 25%
Edita - HoHos,
Twinkies,
Tiger Tail,
Todo, 56%
Al Mansour -
Hero , TeTe ,
13%
Monginis
Bakery -
Monginis, 7%
River Foods -
Droo, 7%
Bisco Misr -
Fundo, 2%
Others, 17%
Mondelez -
Jelly Cola,
Halls, 22%
Edita -
MiMiX, 11.20%
Delta Co. -
Scotch
Mints, 7.80%
Others, 59%

12
AUGUST, 2016
SOURCE: EDITA
Edita Food Industries Co.:
Edita Food Industries SAE was founded in 1996, by the Berzi family and Chipita International (through Exoder Limited). It is a leader in
the Egyptian packaged snack foods market that was estimated at EGP 17.5bn in 2015. It is considered the second largest domestic
snacks producer with c12% market share and it is the largest listed consumer company by market cap on the EGX. It markets,
manufactures and distributes a range of branded baked snack products including packaged cakes, croissants and rusks, wafers as well as
selected confectionary/candy products. Its local brand portfolio includes household names such as Molto, Todo, Bake Rolz, Bake Stix,
Freska and MiMix. Till 2014, it had the exclusive ownership of selected international brands including Twinkies, HoHos and Tiger Tail
“The HTT Brands” in 4 countries; namely Egypt, Libya, Jordan and Palestine. In 2015, it acquired the rights to its existing HTT brands in
additional 12 countries in the MENA region; Algeria, Bahrain, Iraq, Kuwait, Lebanon, Morocco, Oman, Qatar, Saudi Arabia, Syria,
Tunisia and the UAE. It also acquired the technical assistance and know-how to manufacture 11 new Hostess Brands LLC products. It
currently holds the number one market position in the core cakes and croissants segment and number two market position in rusks.
The Group Structure:
Edita Food Industries SAE directly performs all the industrial operations, except for the candy manufacturing which is done by Edita
Confectionary Industries SAE. The group has 3 subsidiaries; Digma SAE, Edita Participation Cyprus LTD and Edita Confectionary Industries
SAE.
Ownership Structure and the IPO:
Digma S.A.E.
99.8%
Edita Confectionary Industries S.A.E.
77.7%
Edita Food Industries S.A.E.
Edita Participation Cyprus LTD
100%
Digma Trading SAE is the group’s distribution company
responsible for the sale of Edita’s products and imported
products. Edita Participation Cyprus Ltd. is a vehicle that was
established to be able to invest in other companies and other
countries in the future; hence it is currently dormant and has no
activities. Edita Confectionary Industries SAE produces the candy
products. It is a JV with Confindel Cyprus, which is the investment
vehicle of the Lavdas Company, a Greek company with massive
experience in the candy production. The remaining 22.3% of Edita
Confectionary is owned by Confindel Cyprus.
Prior the IPO, the Berzi family held 41.8% stake in Edita Food
Industries through Berco Limited. The remaining shares were
those of Africa Samba B.V. and Exoder Limited representing 30%
and 27.9% respectively. Africa Samba B.V. is a subsidiary managed
by the pan-emerging markets private equity firm Actis. Exoder
Limited is wholly-owned by Chipita, a Greek snack foods
manufacturer, selling flour-based snacks and chocolate
confectionary in more than 35 countries. In April 2015, Edita Food
Industries was listed on the EGX, with GDRs (each GDR
representing 5 shares) trading on the London Stock Exchange. The
institutional offering (92,483,770 shares) was 13.4x
oversubscribed, while the retail offering (16,320,665 shares) was
4.5x oversubscribed. The offer price was USD 12.28/ GDR and EGP
18.50/share. Prior to the offering, the company’s issued share
capital was 362,681,450 ordinary shares, each with a par value of
EGP 0.2. The selling shareholders were Africa Samba B.V. and
Exoder Limited. In March 2016, Edita’s EGM approved raising the
company’s capital to reach EGP 145.07mn from 72.5mn, through a
1-1 bonus shares for 2015. In June 2016, Africa Samba B.V., Actis’
subsidiary sold 7% of its share in Edita for EGP 905.8mn. The
company sold 50.7mn shares at an average price of EGP 17.85 and
it remains to hold 8% stake in Edita.
Berco Ltd,
41.82%
Exoder Ltd
(Chipita),
27.98%
Africa Samba
B.V. (Actis),
30%
Others ,
0.21%
Pre-IPO
Berco Ltd,
41.82%
Exoder Ltd
(Chipita),
12.98%
Africa
Samba B.V.
(Actis), 15%
Others (Free
Float),
30.21%
Post-IPO
Berco Ltd,
41.82%
Exoder Ltd
(Chipita),
12.98%
Africa Samba
B.V. (Actis), 8%
Others (Free
Float), 37.70%
June 2016 - Present

13
AUGUST, 2016
STOCK PERFORMANCE AGAINST EGX 30 INDEX
SOURCE: BLOOMBERG
SOURCE: BLOOMBERG
Stock Performance on the EGX:
Edita’s stock (EFID.CA) exhibited a good
performance since its IPO. During the first 3
months, EFID had a positive return of 35% against
a negative performance of the EGX of -5%. Since
the stock inception till date, the stock gained
35.9% while the EGX lost -10%. 0
5
10
15
20
25
EFID - Adjusted for Stock-Split EGX 30-Rebased
Relative Valuation:
Edita’s stock is considered relatively overvalued and is currently trading at a premium. Edita has a higher Leading P/E ratio (30.17x)
than its global (17.76x) and regional (12.94x) peers. Using the leading P/E multiple for global peers, Edita’ FV would stand at EGP
8.52, implying a 41.2% downside potential, while using the leading P/E multiple for regional peers Edita’ FV would stand at EGP
6.21, implying a 57% downside potential.
2015 - P/E 2016 - P/E 2015 - P/B 2016 - P/B
Median Global Food Producers 17.55 17.76 1.24 1.24
Median Regional Food Producers 13.30 12.94 1.21 1.19
Edita Food Industries 30.39 30.17 8.95 7.37
From the below table, we can see that the most of the F&B stocks in the EGX, including Edita are traded at a high P/E ratio,
regionally and globally. This can be attributed to the defensive nature of the sector that should be represented in the investors’
portfolios, especially in a country like Egypt which is featured with strong domestic demand. Consequently, investors opt to
allocate a portion of their portfolios towards the F&B sector regardless of the upside potential driven from DCF method.
2015 - P/E 2016 - P/E 2015 - P/B 2016 - P/B
EDITA 30.39 30.17 8.95 7.37
REGIONAL PEERS
SADAFCO 27.83 15.43 4.14 3.69
ALMARAI CO. 24.36 24.36 3.89 3.89
AGTHIA GROUP PJS 19.87 19.87 2.98 2.98
JORDAN VEGETABLE 18.13 18.13 1.21 1.21
KUWAIT FOOD CO. 17.86 17.86 2.17 2.17
HALWANI BROS CO. 17.47 17.47 3.06 3.06
SAVOLA 14.95 14.95 2.54 2.54
GLOBAL PEERS
MONDELEZ INTERNATIONAL 26.54 26.54 2.53 2.53
CADBURY NIGERIA 27.93 27.93 2.62 2.62
CAMPBELL SOUP CO. 19.95 19.95 11.08 11.08
DAIRY CREST GRP. 20.58 22.17 2.10 6.48
EXOTIC FOOD PCL. 19.76 19.76 3.57 3.57
FLOWERS FOODS 22.36 23.54 3.57 3.67
THE HERSHEY CO. 21.65 21.65 19.39 19.39
NESTLE CI 17.60 17.60 9.17 9.17

14
AUGUST, 2016
Products Portfolio:
Edita operates in 5 core product segments; namely cakes,
croissants, rusks, wafers and candy. All of the segments are
further split into sub-product segments. Majority of the
company’s products are considered mass-market affordable
offerings targeting all demographic groups. Consumers between
the ages of 10-45 years are Edita’s main target market, yet some
products have a narrower focus, such as MiMix toffee and all the
Jelly varieties that have a target market of consumers with ages
10-17, whereas Freska and Bake Rolz are markets for relatively
elder consumers with ages of 16-30 years.
The “Cakes” segment is divided into 3 main sub-segments: filled
cakes, rolled cakes and layered cakes. There are 4 main brands in
the cakes segment; Todo, HoHos, Twinkies and Tiger Tail. Edita
penetrated the Cakes segment in 2003 and it launched the Todo
brand in 2010 as a premium brand in order to capture further
market share. In 2013 Edita acquired the ownership of the HTT
brands in Egypt, Libya, Jordan and Palestine. Twinkies and HoHos
are sold domestically and internationally, while Tiger Tail is an
export brand only. In 2015, Edita acquired the rights to the
existing HTT brands in 12 additional MENA countries and it
acquired the technical assistance and know-how to manufacture
11 new Hostess Brands LLC products. Todo is considered to be a
more of a premium brand targeting consumers of ages 16-24
years living in urban-areas in Egypt and it is exported as well.
Currently the company has 21 SKUs in the Cakes segment.
The “Croissants” segment is divided into 2 main sub-segments:
sweet croissants and savory croissants. Molto is the only brand
under the croissants segment. Molto was introduced in 1997, in
collaboration with Chipita and since then it has become Edita’s
highest selling and fastest growing brand. Molto cheese was
introduced in 2011. Molto is promoted as a snack and an
alternative for meal replacement, targeting ages between 15-25
years. Currently the company has 15 SKUs in the Croissants
segment.
Key Milestones for Edita
1996
* Founding of Edita Food Industries S.A.E.
* Beginning of construction of the E06 Factory in 6th of
October City.
1997
* Launching of Molto Line, the first packaged croissants in
the Egyptian market. "Croissants"
2000 * Entering the baked salty snacks market with the Bake Rolz
brand as an alternative to fried snacks. "Rusks"
2003
* Entering the cakes segment by producing the HoHos,
Twinkies and TigerTail (‘‘HTT’’) brands under license in Egypt
from Hostess. "Cakes"
* Purchasing and upgrading the Hostess factory in 10th of
Ramadan city - E10 Factory.
2010 * Launching the cake products under the Todo brand.
2011
* Sales exceeded EGP 1bn.
* Entering the candy market with the MiMix Brand. "Candy"
* Building the E15 Factory in Beni Suef City, dedicated to the
candy production.
2012
* Launching of the Wafer products, through the Freska
brand. "Wafers"
* Building a new production plant in Polaris Industrial Zone
to meet the increased demand. E07 Factory
2013
* Acquired the HTT brands (previously produced under
license since 2003) for Egypt, Libya, Jordan and Palestine.
* Built a new headquarters and logistics hub in Sheikh Zayed
City.
2015
* The company led a successful IPO on the Egyptian Stock
Exchange "EGX" and the London Stock Exchange "LSE".
* Acquiring rights to the existing HoHo’s, Twinkies & Tiger
Tail (HTT) Brands in 12 additional MENA countries and
acquiring technical assistance and the know-how to
manufacture 11 new Hostess Brands LLC products.
* Acquiring a piece of land in 6th of October City’s Polaris Al-
Zamil district, which falls in close proximity to the E07 plant,
to build a new factory - E08 Factory.
The “Rusks” segment has two brands; Bake Rolz and Bake Stix. The rusks segment was penetrated in 2000 by introducing Bake Rolz. Bake
Rolz was the first baked salty snack in Egypt and was promoted to be a healthier alternative to the traditional salty snacks. Later Bake Stix
was introduced. In 2011, PepsiCo. Introduced its new rusks product, Sunbites, which has led to an increase in competition, yet it led to the
expansion of the market and created further awareness of the segment. Rusks target younger urban consumers between the ages of 16-
20 years. Till date, the rusks segment is relatively new and less developed and it is known to have low penetration and low consumption
frequency. Currently the company has 14 SKUs in the Rusks segment.
The “Wafers” segment is divided into 2 main sub-segments; coated wafers and uncoated wafers. Freska is the flagship brand in the wafers
segment and it was launched in 2012. Freska was backed by a strong advertising campaign where it quickly gained high brand-awareness
and a large market share. It targets younger urban consumers between the ages 16-20 years and it is considered a premium brand, as it
uses a higher-quality chocolate relative to its competitors. The main drawback of the wafers segment is that it is highly fragmented as
there is low product differentiation. Currently the company has 5 SKUs in the Wafers segment.

15
AUGUST, 2016
EDITA’S MARKET POSITION & BRAND AWARENESS
SOURCE: EDITA
The “Candy” segment is divided into 3 main sub-segments; hard candy, soft candy and jellied candy. MiMix is the flagship brand in the
candy segment. MiMix was launched in 2011 as a JV with Confindel, a leading Greek candy manufacturer. It is the sole brand in Egypt
that has products in all candy sub-products except for lollipops. It mainly targets school age consumers in urban areas, while the hard
candy is targeted for relatively elder consumers as well. Currently the company has 18 SKUs in the Candy segment.
The “Imports” segment: In addition to the 5 core segments, Edita acts as the sole distributor of a range of food products, including
Italian pasta from Barilla and olive oils from Asteria, Andalucía, Sparta and La Espanola. These products are mainly sold to the organized
trade and key accounts (hypermarkets) customers.
Industrial Operations:
Edita has 4 state-of-the-art production facilities, two in 6
th
of October city, one in 10
th
of Ramadan city and one in Beni Suef. The
production facility employs more than 50% of Edita’s staff. By the end of 2015, the the total production capacity reached 137,000tpa. In
April 2015, Edita acquired c55,000sqm of land in Sixth of October City’s Polaris Al-Zamil district, in close proximity to its E07 plant to
build a new factory. Construction in the new E08 factory has already begun and it is expected to come online by 2017. The E08 factory
will have a size that is relatively similar to the E07 factory and hence we expect it to have 10-11 production lines, all to be operational
by 2020.
1. E06 Factory - 6th of October City 2. E10 Factory - 10th of Ramadan 3. E15 Factory - Beni Suef
* Began operations in 1997. * Acquired in 2003. * Began operations in 2011.
* Produces Croissants, Cakes, Baked Snacks. * Produces Cakes.
* Produces Hard Candy, Soft Candy and
Jelly.
* 10 Production Lines. * 4 Production Lines. * 3 Production Lines.
* Total Land Area: 33,638sqm. * Total Land Area: 11,733sqm. * Total Land Area: 25,611sqm.
* Total Built-Up Area: 21,865sqm. * Total Built-Up Area: 7,392sqm. * Total Built-Up Area: 5,378sqm.
Market
Position
Market
Share
Relative
Market
Share
2015 Average
Consumer Price
(EGP/USD)
Brands
Brand
Awareness
Markets
Cakes #1 64% 8.3x 0.74 / 0.09
TODO - HoHo's
- Tiger Tail -
Twinkies
97%
MENA including Egypt, Iraq, Libya,
Jordan, Palestine, Syria, Yemen,
Oman, Saudi Arabia, Kuwait,
Morocco, Tunisia and Lebanon.
Croissants #1 68% 3.2x 1.13 / 0.14 Molto 100%
Jordan, Palestine, Yemen, Lebanon
and Tanzania.
Rusks #2 37% 0.6x 1.00 / 0.13
Bake Rolz -
Bake Stix
88%
Jordan, Palestine, Syria, Yemen,
Lebanon.
Wafers #4 8% 0.2x 1.00 / 0.13 Freska 81%
MENA including Egypt, Jordan,
Palestine, Syria, Yemen, Saudi Arabia,
Kuwait, Morocco, Lebanon.
Candy #2 12% 0.7x 2.18 / 0.28 MiMix -
MENA including Egypt, Jordan, West
Bank, Saudi Arabia, Lebanon and
Kenya.
*Relative market share is calculated as Edita's market share divided by the market share of the largest competitor.

16
AUGUST, 2016
SOURCE: EDITA
EVOLUTION OF PRODUCTION LINES
EVOLUTION OF PRODUCTION LINES
FACTORY UTILIZATION
4. E07 Factory (Halls A & B) -
Polaris Industrial Park -Polaris Al-Zamil
5. E08 Factory (Halls A & B) -
Polaris Industrial Park - Polaris Al-Zamil
* Began operations in 2012 & extended in 2015. * Land purchased in April 2015.
* Produces Croissants, Cakes, Wafers and Rusks. * Expected to come online by 2017.
* 9 Production Lines (Post the addition of 4 new
lines in 2015). * Expected to house c10 production lines.
* Total Land Area: 50,000sqm. * Total Land Area: 55,000sqm.
* Total Built-Up Area: 30,500sqm.
Cake Croissants Rusks Wafers Candy Total
1997 0 1 0 0 0 1
1998 0 2 0 0 0 2
1999 0 2 1 0 0 3
2003 4 2 1 0 0 7
2006 6 2 1 0 0 9
2007 7 3 2 0 0 12
2008 8 3 2 0 0 13
2009 9 3 2 0 0 14
2011 9 3 2 0 3 17
2012 10 4 2 1 3 20
2013 10 5 2 1 3 21
2014 10 5 2 1 3 21
2015 11 7 3 1 3 25
1Q 2016 11 8 3 1 3 26
82% 88% 100% 88% 86%
0%
50%
100%
2012 2013 2014 2015 1Q 2016
1
2
3
7
9
12
13
14
17
20
21 21
25
27
0
5
10
15
20
25
30
Edita has achieved very high utilization rates for all of its factories during the
last several years, where it surpassed 100% in 2014. The company has
historically had to add factories, production lines and overall production
capacities in order to fulfill the growing demand for its products. Edita will
have to keep adding additional production lines and capacities so it does not
lose any of its market shares which can occur quiet rapidly due to the
dynamicity of the Fast-Moving Consumer Goods (FMCG) industry. By the end
of 2015, within the 4 facilities, Edita had 25 production lines, comprised of 7
lines for croissants, 11 lines for cakes, 3 lines for rusks, 1 line for wafers and
3 lines for candy. In 2016, Edita installed its new Strudel line with 2 SKUs,
launched to market end of March 2016, under the Molto brand, namely the
Patte au Chocolat and the Patte au Agwa, where it was able to price them at
EGP 3/pack. The company plans to install another new candy line with a total
capacity of c.2,000tpa in its E15 factory in the 2H2016 and another wafer line
in the new E08 factory with capacity 3,000tpa in the 2Q2017. Edita is
currently exploring opportunities to fully utilize the remaining available area
in its E07 factory by adding a new production line. It is worthy to note that
the company is planning to launch some of the 11 new products that it
acquired their production know-how on its existing production lines by 2016.
We believe that till 2020, Edita will be able to install 2-3 new lines per
annum, adding c50% additional capacity during 2016-2020. The cost of
installing a new production line varies severely, according to the capacity
and the type of product; the rusks line was relatively expensive as it cost EGP
90mn, where the strudel line was relatively cheap as it cost EGP 40mn.
101
7.6
24.4
3.7
137
8.3 2
147.1
21
1 2 1
25
1 1
27
0
20
40
60
80
100
120
140
Capacity ('000s Tons) No. of Production Lines

17
AUGUST, 2016
BREAKDOWN OF DIRECT RAW MATERIALS
SOURCE: EDITA
SOURCE: EDITA
Business Model:
- Sourcing of Raw Materials:
- Distribution Network.
Edita has a solid domestic distribution network, which plays a very important role in the penetration of its products and distribution
across a wide geographical area. This gives Edita a competitive edge as having a solid distribution network may act as barrier to
entry for potential competitors. By the end of 2015, Edita had 20 distribution centers and it added one in 1Q2016, making it a total
of 21. The distribution centers are across 16 governorates. Most of the distribution centers are rented under long-term contracts of
up to 10 years.
The main raw materials for Edita are sugar, flour, cocoa, oils and fats, milk
and eggs, which comprise c80% of the total direct raw material requirements
by value. Such diversity in raw materials requirements, which include more
than 100 raw materials, reduces the short-term price fluctuations. For every
material, the company maintains a diverse network of reliable suppliers,
where usually it purchases from more than 100 suppliers. Generally, no
supplier accounts for more than 10% of the direct materials by value. The
company sources materials directly from producers, rather than from
traders, where it enables the company to secure better payment terms. The
company does not commit to long-term contracts with the supplier. More
than 75% of the raw materials are sourced locally and the remaining 25%,
which represents 20% of total COGS, is sourced from international markets.
The non-EGP revenues cover c.50% of the imported raw materials and the
remaining 50% is secured from either then banking system other external
sources. It purchases materials under purchase agreements with a maximum
term of one year. The average payment term with the suppliers is around 45
days. The company seeks to maintain a maximum of one month’s supply of
locally sourced materials and a maximum of three months’ supply of
imported materials and it has at least 2 approved suppliers of every direct
material. The company has been affected by the FX shortage, even though it
is a F&B company which is given a high-priority according to the CBE
regulations. Most of the F&B companies have suffered from longer lead
times and they sometimes seek the parallel market. Moreover, some of the
small-scale suppliers that supply the major food producers, such as Edita,
with raw materials face some impediments to secure FX, which may
consequently cause some disturbances for the large food producer.
According to management, Edita has suffered from an increase in lead time
for imports due to the current macroeconomic environment, even though it
has strong relations with the banks due to having a portion of the revenues
that is denominated in FCY. Edita booked some direct materials for 2016 at
quiet favorable prices, which is expected to offset partially the effect of the
EGP devaluation.
Packaging
Materials ,
28%
Oils & Fats ,
15%
Sugar, 13%
Flour, 12%
Eggs, 9%
Milk
Powder, 3%
Cocoa
Powder, 3%
Others , 17%
2012 2013 2014 2015 1Q 2016
Distribution Centers 13 15 16 20 21
Vehicles 369 425 491 544 566

18
AUGUST, 2016
ACTIVE SKU MANAGEMENT
SALES MIX
SOURCE: EDITA
- Pricing & Active SKU Management.
Edita tries to rationalize the number of SKUs in order to achieve efficiencies while maintaining their consumers’ loyalty. The
company has undertaken many strategies in the past, referred to as “Covert Pricing Strategies”. These strategies include: 1.
introducing new products/flavors in existing segments at higher prices per pack, 2. introducing new premium products, 3. higher
pricing for disproportionately larger packaging, 4. reducing the average weight per pack and 5. decrease the number of pieces per
pack. SKUs are sometimes delisted because either they are replaced by other relatively more profitable SKUs, or because they do
not generate sufficient margins (the management has a preset minimum margin of 35% per SKU, if unattainable, the SKU is
delisted). Due to the low prices of Edita’s products, it is usually very difficult to raise prices for the same SKU, even with minute
increases of EGP 0.5, which is the smallest currency in circulation. Edita has never been able to raise the price of a single SKU
without changing its size. Edita’s usually prefers the strategy of “SKU Upsizing”; raising the new SKU price with a higher rate than
that of the pack/ product weight, then the old SKU is delisted. Consumers are not always acceptable of this strategy though, as
volumes are usually hit very hard in the short-term and may take a several years to adjust. It is worthy to note that SKU upsizing in
some products was unsuccessful in 2012 and it took sales two whole years to adjust. Also the Twinkies upsizing was the main
reason behind the drop in revenues in 1Q2016, where the company raised the pack price by 100% reaching EGP1/pack instead of
EGP 0.5/pack. However due to rise in the prices of most of the goods in the market and consumer awareness of inflationary
effects on all food items, the management believes that it will take lesser time for the volumes to adjust.
- Improving Sales Mix:
Edita has a diversified sales mix. In 1Q2016, Edita had 5,221 wholesale customers where they represented 55% of the total
revenues. It tries to maintain good relations with the top 100 wholesalers as they represent more than 40% of the wholesale
revenues. By 1Q2016, the company had 59,783 directly served retail clients, where their sales represent 34% of revenues. Edita
plans that the retail would represent 50% of revenues by 2018 as the retail customers are usually less price sensitive than
wholesalers. The figures below show that the company is doing good progress so far. Key accounts, which are mainly the hyper
markets and the large supermarket chains, represent only 2% and this is the only channel that is allowed to purchase on credit.
Direct supply represents sales that are made directly to schools and universities and it represented only 2% of revenues in 2015.
14 13 15
2 5 6
0
-2 -2 -3 -2 -10
41
52
65 64 67 63
-20
0
20
40
60
80
2010 2011 2012 2013 2014 2015
New SKUs
Delisted SKUs
Total SKUs
63%
25%
2%
2%
8% 2012
Wholesale
Retail
Key Accounts
Direct Supply
Exports
60%
31%
2%
1% 6% 2014
Wholesale
Retail
Key Accounts
Direct Supply
Exports

19
AUGUST, 2016
SOURCE: EDITA
REVENUES, TONNAGE AND PACKS REVENUE CONTRIBUTION IN 2015
SOURCE: EDITA
- Working Capital & Cash Conversion Cycle:
Edita operates a Self-funded Working Capital, Edita has 11.8 Receivables DOH (average collection period), 53.08 Payables DOH
(average paying period) and 36.2 Inventory DOH. This is mainly due to: 1. More than 97% of sales are performed on a cash basis
(2014 & 2015). The cash is collected at the time of sale and it is used to fund operations, 2. The company is able to obtain favorable
terms from suppliers and 3. The raw materials and the end product have relatively short lives and cannot be stored for long
periods. Consequently, this makes the company benefit from a “Negative Cash Conversion Cycle”; where the company has the
ability to sell its products before paying its obligations.
Financial Analysis:
Revenues:
The Cakes segment, contributed 54.2% to Edita’s revenues in 2015. The segment posted EGP 1,205mn of revenues in 2015 versus
EGP 1,142mn in 2014, with a slight increase of 5.5% y-o-y. The average price point for the cakes, specifically Twinkies rose by 8.2%
as a result of its upsizing. The upsizing is apparent in the packs and tons figures; 65.1 thousand tons were sold in 2015, versus 64
thousand tons were sold in 2014, however less packs were sold as it sold 2,127mn packs in 2015 and 2,181mn packs were sold in
2014.
The Croissants segment, contributed 33.6% to Edita’s revenues in 2015. The segment posted EGP 749mn of revenues in 2015
versus EGP 564mn in 2014, rising by a whopping 32.8% y-o-y. This segment is the main trigger behind the rise in revenues. Volumes
sold rose by 31.9% in 2015 where it sold 850mn packs in 2015 versus 644mn packs in 2014.
The Rusks segment contributed 4.2% to Edita’s revenues in 2015. The segment posted EGP 94mn in 2015 versus EGP 89mn in 2014,
showing a rise of 5.6%. The volumes sold rose in 2015 by 6.4%, as the company sold 117mn packs in 2015 versus 110mn packs in
2014. Till the end of 2015, the rusks segment used to operate at full capacity – 100% utilization rate - producing 3.9 thousand tons
58%
33%
2%
1% 6% 2015
Wholesale
Retail
Key Accounts
Direct Supply
Exports
55%
34%
2%
1%
7% 1Q 2016
Wholesale
Retail
Key Accounts
Direct Supply
Exports
In 2015, revenues grew by 16% y-o-y
to reach EGP 2,225mn compared to
EGP 1,919mn a year earlier. The
improvement in revenues occurred
due to an increase in the volumes
and a slight increase in prices as well.
Edita sold 3.28bn packs in 2015,
where it sold 3.07bn packs in 2014, a
raise of 6.8%. As for the tonnage,
total tonnage sold in 2015 was 114.6
thousand tons versus 101.1
thousand tons in 2014.
2,225
114.6
3,281
1,919
101.1
3,074
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Revenues -
EGP mn
Tonnage -
000's
Packs - mn
2015
2014
54.20%33.60%
4.20%
3.80%
3.80% 0.40%
Cakes
Croissants
Rusks
Wafers
Candy
Imports

20
AUGUST, 2016
NET SALES, PACKS AND TONNAGE PER SEGMENT
2015 AVERAGE PRICE POINTS
SOURCE: EDITA
SOURCE: EDITA
in 2015 versus 3.6 thousand tons in 2014. It is expected that the rusks segment will witness a boost in their sales, due to the
installation of the new rusks line in December 2015, where it doubled the segment capacity to reach 7.4 thousand tons.
The Wafers segment contributed 3.8% to Edita’s revenues in 2015. The segment posted EGP 85mn of revenues in 2015 and EGP
64mn in 2014. The volumes sold by 33.7% in 2015, where it sold 115mn packs versus 86mn packs in 2014. Also the wafers segment
is working at very high utilization rates till date, and thus a new production line will be installed in 2017 with a total capacity of
3,000tpa.
The Candy segment showed the strongest growth in revenues in 2015, coming from a very low base. Revenues from the candy
segment showed a rise of 58.5% y-o-y, recording revenues of EGP 84mn versus EGP 53mn in 2014. The volumes sold rose by 31.5%
y-o-y where it sold 71mn packs in 2015 versus 54mn packs. This improvement came on the back of capacity additions and growing
market share in the Egyptian snacks market. It is worthy to note that the management is keen on gaining further market share in
the candy segments, evidenced by the new production line that is going to be installed in the 2H2016 with a total capacity of 2,000
tpa.
The Imports segment was flat and no change occurred in 2015, where sales revenues remained at EGP 8mn and it had a minimal
contribution of 0.4% in 2015.
2015 2014
Net Sales Packs Tons Net Sales Packs Tons
EGP mn mn 000s EGP mn mn 000s
Cakes 1,205 2,127 65.1 1,142 2,181 64
Croissants 749 850 38.9 564 644 28.9
Rusks 94 117 3.9 89 110 3.6
Wafers 85 115 3.1 64 86 2.4
Candy 84 71 3.7 53 54 2.3
Imports 8 - - 8 - -
Total 2,225 3,281 114.6 1,919 3,074 101.1
As for the prices, the average price per pack for Edita’s entire product portfolio rose by 8.7% in 2015 reaching EGP 0.68/per pack
against EGP 0.62/pack. Candy and Cakes are the two segments that witnessed a hike in prices. The cakes prices increased due to
the upsizing of Twinkies and the Candy prices increased due to the introduction of higher priced SKUs and new products and
flavors for the soft candy.
2015 2014 %
Cakes 0.57 0.52 8.20%
Croissants 0.88 0.88 0.50%
Rusks 0.81 0.81 -0.30%
Wafers 0.74 0.74 -0.30%
Candy 1.13 0.98 21.00%
Average 0.68 0.62 8.70%

21
AUGUST, 2016
GROSS SALES – LOCAL VS. EXPORT
DIRECT MATERIALS (AS % OF REVENUES & AS % OF COGS)
SOURCE: EDITA
SOURCE: EDITA
The majority of Edita’s sales come from the local market, as 94% of the gross sales came from the domestic market in 2015. We believe
that during the coming several years, the exports sales will increase, on the back of the Edita’s plan to penetrate 12 additional markets;
Algeria, Bahrain, Iraq, Kuwait, Lebanon, Morocco, Oman, Qatar, Saudi Arabia, Syria, Tunisia the UAE. Consequently the non-EGP
revenues will increase in USD and EGP terms, which will be positive incase of further EGP devaluation in the coming period and it will
enable the company to cover more of the non-EGP expenses; namely raw materials.
In 1Q 2016, Edita’s revenues dropped slightly by 2%, standing at EGP 518.1mn versus EGP 528.9mn in 1Q2015. This was primarily due to
the lower capacity utilization in the cakes segment due to the Twinkies upsizing. The utilization rate in the cakes segment reached 64%,
leading to the drop of 15.3% in the cakes revenues.
COGS:
Gross Profit:
In 2015, gross profit increased by 20.4% to reach EGP 944.89mn against EGP 784.6mn in 2014. The cakes and croissants are the top
contributors to gross profit with 54.9% and 35.1% respectively. As for the Gross Profit Margin (GPM), it stood at 42% in 2015, showing
an improvement of 37.6%, which reflects the company’s direction towards the higher price points and the higher priced SKUs. It is
noteworthy that croissants had the highest Gross Profit per Pack in 2015, EGP 0.36 per pack, while the wafers had the highest Gross
Profit per Ton in 2015, EGP 11,058 per ton.
In 1Q2016, gross profit improved by 1.5% y-o-y as it recorded EGP 205.7mn against EGP 202.6mn. This came on the back of COGS
dropping by a larger rate that that of revenues. The GPM stood at 39.7% in 1Q2016 versus 38.3% in 1Q2015.
2015 2014 2013 2012
Local Gross Sales - EGP mn 2,120 1,899 1,615 1,294
% of Gross Sales 94% 94% 94% 92%
Export Gross Sales - EGP mn 143 112 110 109
% of Gross Sales 6% 6% 6% 8%
Total Gross Sales - EGP mn 2,263 2,011 1,725 1,403
In 2015, total COGS (excluding depreciation) rose by 13% y-o-y to reach
EGP 1,280.5mn versus EGP 1,133.9mn in 2014. COGS rose at a lower rate
than that of revenues and this is mainly due to the general decline in
global commodity prices that occurred due to the piling up of inventory
and the excess supply of major crops along with a slowdown in the
demand coming the emerging markets, in addition to the company’s
ability to secure raw materials, which represent c80% of COGS, at quiet
favorable prices. The imported direct materials constituted 25% of total
direct materials in 2015, versus 23% in 2014, mainly due to the EGP
devaluation. This led to a decline in the COGS/Sales ratio, where it
reached 61% in 2015 against 62.4% in 2014. On the other hand, the
manufacturing overhead (MOH), which represents 19% of COGS climbed
20% y-o-y in 2015 due to the rise in the costs of salaries, electricity,
natural gas and machinery maintenance.
COGS dropped in 1Q2016 where it recorded EGP 312.4mn against EGP
326.3mn, dropping by 4.3%. This is mainly due to continuation of
declining of global commodities and the EGP devaluation has not been
reciprocated in the imported raw materials.
47% 49% 51% 52%
77% 79% 81% 81%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
2015 2014 2013 2012
As % of Revenues As % of COGS

22
AUGUST, 2016
GROSS PROFIT CONTRIBUTION IN 2015 GROSS PROFIT PER SEGMENT
GROSS PROFIT PER PACK - EGP GROSS PROFIT PER TON - EGP ‘000S
CAPEX 2012 - 2015
SOURCE: EDITA
CAPEX:
Edita invests heavily in CAPEX, where it spent EGP 226.18mn on average per annum since 2012. This high expenditure is necessary, as
the company has achieved very high utilization rates in the past and it needs to keep installing new lines and introducing new products
so it does not lose market share. We believe that in the 5 coming years, the need for CAPEX expenditure will be high. We expect that
Edita will install 2-3 lines per annum till the end of 2020 in its E08 plant and in the unutilized space in E07 that is has the capacity to
install a single production line.
54.9%35.1%
3.1%
4.1% 2.5% 0.4%
Cakes
Croissants
Rusks
Wafers
Candy
Imports
39.5% 40.6%
28.4%
42.2%
25.2%
38.5% 40.1%
24.9%
36.4%
12.0%
0%
10%
20%
30%
40%
50%
Cakes Croissants Rusks Wafers Candy
2015 2014
7.31 7.82 6.85
11.58
5.76
0.00
5.00
10.00
15.00
Gross Profit per Ton - EGP '000s
0.22
0.36
0.23
0.31 0.30
0.00
0.10
0.20
0.30
0.40
Gross Profit per Pack - EGP
2012 2013 2014 2015
- Maintenance CAPEX – EGP Mn 26.5 56.5 63.2 95.3
- % of Revenue 2% 3.5% 3.3% 4.3%
- Expansion CAPEX – EGPmn 64.8 44.8 187.1 255.6
- Other One-Time Exp.
CAPEX – EGP mn 42.3 53.4 4.4 10.9
- Total CAPEX – EGP mn 133.5 154.7 254.7 361.8
*CAPEX Drivers
* Partial investments in 3
new lines.
* Partial investment in the
new Polaris Industrial Park
plant.
construction of Zayed HQ.
* 1 New line.
* ERP System upgrade
(SAP License).
construction of Zayed HQ
* Partial investment
(c.50%) in the expansion of
Polaris Industrial Park
Plant.
* 3 Lines came online in 1Q
2015
* EGP 56.7mn pertaining E08 land
acquisition, related infrastructure and
utilities work. *
EGP 198.9mn due to the completion of
Hall B (Extension of E07)
* EGP 68.7mn to new rusks line to start
operations by 2016
* EGP 33.1 for a new strudel line

23
AUGUST, 2016
CAPEX 1Q 2016 & 2016 OUTLOOK
SOURCE: EDITA
SOURCE: PRIME ESTIMATES
Debt:
Edita has a relatively small exposure to debt and has several credit facilities; it has a debt/equity ratio of 44.9%. One of the key risks for
Edita is its debt exposure to interest rates risk; all the outstanding loans have variable interest rates, which are primarily set with
reference to the mid-corridor rate of the CBE. This entails that the company faces risk in case of raising interest rates as it would raise
the interest expense and it would increase the cost of refinancing the existing debt and the issuance of new debt. Edita does not hedge
against its interest rate exposure.
Net Profit:
Edita’s net profit (before minority interest) rose by an enormous 31.3% in 2015, recording EGP 349.1mn, against EGP 265.9mn. The Net
Profit Margin improved in 2015 to reach 15.7%. In 1Q2016, net profit for the quarter dropped severely, recording EGP 32.7mn versus
EGP 59.5mn in 1Q 2015.This drop in profit is attributed an EGP 44.5mn in FX losses due to the EGP devaluation. The Net Profit Margin
dropped rigorously to reach 6.3% against 11.2%
Assumptions & Forecasts:
- Snack Foods Industry
EGP Bn. 2016f 2017f 2018f 2019f 2020f
Cakes 2.09 2.57 3.17 3.90 4.79
Croissants 1.15 1.53 2.04 2.72 3.62
Salty Snacks 8.26 9.75 11.50 13.56 15.99
Rusks Market 0.43 0.57 0.76 1.02 1.36
Wafers 2.26 2.83 3.53 4.42 5.53
Candy 0.67 0.77 0.88 1.02 1.17
Biscuits, Gums, Chocolate 6.83 8.40 10.34 12.73 15.66
Local Snacks Market 21.3 25.8 31.5 38.3 46.8
1Q 2016 2016 -Outlook
- Maintenance CAPEX– EGP mn 25.4
EGP 460mn planned total CAPEX out of which:
* EGP 160mn related to E08 construction of Hall A
* EGP 55mn related to the new candy line in E15 factory.
* EGP 53mn of maintenance CAPEX, mainly for distribution
vehicles, machinery maintenance and R&D.
* EGP 53mn allocated for waste water treatment and
manufacturing excellence related projects.
* EGP 70mn planned new line in 2016
- % of Revenue 0.049
- Expansion CAPEX – EGP mn 13.7
-Other One-Time Exp. CAPEX – EGP mn 9.6
- Total CAPEX – EGP mn 48.7
* CAPEX Drivers
* EGP 10.7mn was the residual of the Strudel Line.
* EGP 2mn related to the new rusks line.
* EGP 1mn spent on the construction of Hub A in
factory E08

24
AUGUST, 2016
- Revenues:
Cakes 2016f 2017f 2018f 2019f 2020f
Sales - EGP MN 1,388 1,613 1,821 2,040 2,315
Sales - Tons 71,435 79,035 86,635 94,235 101,835
Average Selling Price EGP / Ton 19,435 20,407 21,019 21,650 22,733
Croissants 2016f 2017f 2018f 2019f 2020f
Sales - EGP MN 980 1,349 1,601 1,976 2,184
Sales - Tons 48,454 63,511 72,511 86,040 90,568
Rusks 2016f 2017f 2018f 2019f 2020f
Sales - EGP MN 192 199 205 212 229
Sales - Tons 7,396 7,396 7,396 7,396 7,766
Wafers 2016f 2017f 2018f 2019f 2020f
Sales - EGP MN 90 123 175 182 187
Sales - Tons 3,131 4,066 5,566 5,566 5,566
Candy 2016f 2017f 2018f 2019f 2020f
Sales - EGP MN 102 136 146 159 174
Sales - Tons 4,142 5,142 5,142 5,245 5,399
Imports 2016f 2017f 2018f 2019f 2020f
Imports Sales - EGP MN 8 9 9 10 11
Total Revenues 2016f 2017f 2018f 2019f 2020f
Total Revenues - EGP MN 2,760 3,429 3,958 4,579 5,099
Local Market - EGP MN 2,539 3,086 3,562 4,029 4,487
% of Total Revenues 92% 90% 90% 88% 88%
Export Sales- EGP MN 221 343 396 549 612
% of Total Revenues 8% 10% 10% 12% 12%
-

25
AUGUST, 2016
- COGS:
2016f 2017f 2018f 2019f 2020f
Raw Materials - EGP Mn 1,317 1,570 1,826 2,123 2,276
% of COGS 77% 76% 75% 75% 75%
Raw Materials / Ton 9,500 9,799 10,073 10,314 10,563
% Imported Raw Materials 25% 25% 25% 25% 25%
Imported Raw Materials / Ton 1,892 1,962 2,002 2,001 2,000
Price per Ton in USD 217 219 224 228 233
Imported Raw Materials Price per Ton in EGP 1,892 1,962 2,002 2,001 2,000
% Locally Sourced Materials 75% 75% 75% 75% 75%
Locally Sourced Raw Materials - Price Per Ton 7,608 7,836 8,071 8,314 8,563
2016f 2017f 2018f 2019f 2020f
Labor - EGP Mn 144 183 222 269 302
% of COGS 8% 9% 9% 10% 10%
Labor per Ton 1,038 1,142 1,222 1,308 1,399
2016f 2017f 2018f 2019f 2020f
Utilities - EGP Mn 39 52 67 82 91
% of COGS 2% 2% 3% 3% 3%
Utilities per Ton 280 322 371 397 425
2016f 2017f 2018f 2019f 2020f
Depreciation - EGP Mn 78 103 122 131 143
% of COGS 5% 5% 5% 5% 5%
Depreciation per Ton 314 314 314 314 314
2016f 2017f 2018f 2019f 2020f
Others - EGP Mn 141 164 188 215 228
% of COGS 8% 8% 8% 8% 7%
Others per Ton 1,015 1,025 1,035 1,046 1,056
Total COGS (Including Depreciation) 1,718.7 2,072.2 2,424.2 2,819.7 3,039.6
Total COGS (Excluding Depreciation) 1,641.0 1,969.0 2,302.5 2,688.9 2,896.8
-

26
AUGUST, 2016
Stock Recommendation Guidelines
Recommendation Target-to-Market Price (x)
Buy x > 15%
Accumulate 5%< x <15%
Hold -5% < x < 5%
Reduce -15% < x < -5%
Sell x < -15%
Strong Buy x > 40%
Investment Grade Explanation
Growth 3 Yr. Earnings CAGR > 20%
Value Equity Positioned Within Maturity Stage of Cycle
Speculative Quality Earnings Reflect Above Normal Risk Factor

27
AUGUST, 2016
PRIME SECURITIES
Hassan Samir Managing Director  +202 3300 5611 Hsamir@egy.primegroup.org
RESEARCH TEAM
Aboubakr Emam, CFA Manager  +202 3300 5724  Aemam@egy.primegroup.org
Eman Negm, MSc Economist  +202 3300 5716  Enegm@egy.primegroup.org
Mohamed Marei Equity Analyst  +202 3300 5725  Mmarei@egy.primegroup.org
Ali Afifi Equity Analyst  +202 3300 5723  Aafifi@egy.primegroup.org
Omneya El Hammamy Equity Analyst  +202 3300 5718  OelHammamy@egy.primegroup.org
Ingy Fahmy Equity Analyst  +202 3300 5722  Iashraf@egy.primegroup.org
Mohamed Magdi Junior Equity Analyst  +202 3300 5720  Mmagdi@egy.primegroup.org
SALES TEAM
Mohamed Ezzat Head of Sales & Branches  +202 3300 5784  mezzat@egy.primegroup.org
Shawkat Raslan Heliopolis Branch Manager  +202 3300 5110  sraslan@egy.primegroup.org
Amr Saber Team Head – Institutions Desk  +202 3300 5659 asaber@egy.primegroup.org
Amr Alaa, CFTe Manager  +202 3300 5609 aalaa@egy.primegroup.org
Mohamed Elmetwaly Manager  +202 3300 5610 melmetwaly@egy.primegroup.org
Emad Elsafoury Manager  +202 3300 5624 eelsafoury@egy.primegroup.org
HEAD OFFICE
PRIME SECURITIES S.A.E.
Regulated by CMA license no. 179
Members of the Cairo Stock Exchange
2 Wadi El Nil St., Liberty Tower,
7th-8thFloor, Mohandessin, Giza, Egypt
Tel: +202 33005700/770/650/649
Fax: +202 3760 7543
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