Obour Land for Food Industries - OLFI - Initiation of Coverage

PRIME INVESTMENT RESEARCH
FOOD & BEVERAGE |EGYPT
OBOUR LAND FOR FOOD INDUSTRIES – INITIATION OF COVERAGE
JANUARY 24TH
2017
SOURCE: BLOOMBERG
OBOUR LAND FOR FOOD INDUSTRIES …
SUPERIOR MANAGEMENT COUPLED WITH ORGANIC AND INORGANIC GROWTH OPPORTUNITIES ….
Stock Data
Outstanding Shares [Mn] 200
Mkt. Cap [EGP Bn] 1.8
Bloomberg – Reuters OLFI EY, OLFI.CA
LOW/HIGH - SINCE INCEPTION 8.61 – 9.80
DAILY AVERAGE TURNOVER (‘000S) 11,605
Ownership
SHERIF FAMILY 64.8%
NORGES BANK 4.0%
LAZARD CAPITAL 2.7%
DUET CAPITAL 2.2%
PRINCE STREET CAPITAL LTD. 1.8%
LOCAL INSTITUTIONS 9.7%
FOREIGN INSTITUTIONS 11.6%
FREE FLOAT / RETAIL 3.0%
INVESTMENT GRADE
“GROWTH”
We initiate our coverage for Obour Land for Food Industries - with a “Buy”
rating driven from an upside potential of 38.1%; driven from our estimated
Fair Value of EGP 12.43 /share. The company’s P/E Multiple for 2017 would
stand at 7.44x.
The Egyptian Food & Beverage industry witnessed a lot of changes during 2016. Two
main factors shaped the industry during the year; (1) The FX shortage / volatility
and (2) The high rates of inflation. In the past, the F&B producers have always
been able to secure the FX they needed from the official banking sector, even when the
FX shortage started to affect other industries. By April 2016, the F&B companies started
to resort to the parallel market to secure some of the required FX, where by June /July
2016, most of the F&B companies announced that they were securing c90-95% of their
required FX from the parallel market. After the EGP floatation that took place in
November 2016, the large F&B producers announced that they were largely back to
securing most of their required FX through the official banking sector, where they only
secured a small portion from the parallel market. As for the inflation, the Egyptian
economy witnessed very high rates of inflation during 2016. In December 2016, the
headline and core inflation recorded the highest rates since 2003, as they stood at
23.3% and 25.9% respectively. Such high rates for the headline inflation were mainly
driven by the increase in food prices, the rise in the healthcare costs and the increase
in the transportation costs. The high inflation has affected the purchasing power of
consumers in many aspects, however, the severity has been different among many
product categories; products that were perceived as cheap and essential were not as
affected as products that were perceived to be relatively expensive and non-essential.
Other factors that also affected the industry were the rise in the cost of debt, the rise in
the cost of most of the utilities; such as water and electricity, the partial removal of the
fuel subsidies and the application of the VAT.
All the aforementioned factors had a negative effect on the F&B producers, yet the FX
crunch and the hike in EGP/USD had the worst effect due to the sector’s huge reliance
on imported raw materials, as most of the companies import 50-85% of their raw
materials. All the F&B producers faced a huge dilemma which was their inability to pass
the increase in the costs to the consumers in a single price hike due to the fear from
competition and the fear from the deteriorating purchasing power of the consumers.
Consequently, most of the F&B producers preferred to raise their prices gradually over
4-6 quarters, where the consumers would be more acceptable of this sort of price
increases.
We believe that 2017 is going to be majorly different than 2016. From our perspective,
2017 is going to be the beginning of a new era, with different price levels and
consumption patterns. The high rates of inflation is expected to persist in the coming
years, where the double-digit rates of inflation are expected to remain at such levels till
2019-2020. Due to the high inflation, consumers will start to adjust their consumption
patterns and producers will keep gradually passing the rest of the increase in costs that
they were not able to pass in 2016.
Obour Land for Food Industries was founded by Eng. Mohamed Hamed Sherif and Mr.
Ashraf Hamed Sherif in 1997. The company commenced operations in 1999 with a
single production line of plastic tub cheese with an annual production capacity of 4.1
thousand tons (daily production capacity of 400kg). Currently the company has 13
production lines with an annual production capacity of 134.4 thousand tons (daily
production capacity of 400 tons), where 12 of these production lines are Tetra Pak
production lines that are used for the production of carton pack cheese and the
remaining production line is used for the production of the plastic tub cheese.
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OLFI EGX30 Rebased
Prices as of 23/1/2017
Report Content:
Valuation .................................................….... 3
The Egyptian Cheese Industry ……………... 5
Obour Land for Food Industries ……............ 9
“BUY”
MARKET PRICE EGP 9.00
FAIR VALUE EGP 12.43
POTENTIAL 38.1% UPSIDE
UPSIDE

2
JANUARY, 2017
The company plans to capitalize on its strong brand equity and penetrate new segments, as the company believes that the
new segments / products would complement the company’s existing portfolio. The new segments that the company will
penetrate are mozzarella cheese, spreadable (processed) cheese, milk and juice. The company will add 9 production lines in
2017, where they are expected to become operational by 2Q2017. The new production lines will be divided between the
existing and the new segments; three of the new production lines will be for the carton pack cheese production (annual
capacity: 65.3 thousand tpa), 1 production line for the production of the mozzarella cheese (annual capacity: 3.6 thousand
tpa), 1 production line for the production of the spreadable cheese (annual capacity: 3.6 thousand tpa), three production lines
for the production of juice (annual capacity: 99mn liters) and a single production line for the production of milk (annual
capacity: 27mn liters).
Obour Land had the largest market share by brand in the carton pack cheese with a share of 39% in the 9M2016, however,
by company, it would have had the second largest market share, after Domty’ share of 43% during the same period. The
company has a superior performance in the regions of Delta and Upper Egypt, which are Egypt’s two most populous regions.
Although consumers in the Delta and Upper Egypt regions have lower purchasing power compared to that of the consumers in
the Greater Cairo region, these regions have grown at faster rates in the past and they are expected to have a higher demand
for cheese in the coming years, given that cheese is one of the cheapest sources of protein, when being compared to either
meat or chicken. Even though Obour Land has the second largest market share, it is worthy to note that Obour Land has
shown quiet a robust growth in the past years; Obour Land’s market share grew from 23% in 2013 to 39% in 9M2016, while
on the other hand, Domty’s market share was quiet static as it only grew from 39% in 2013 to 43% in 9M2016.
The company relies heavily on sales to small retail shops, including indirect sales to small, retail shops through the company’s
wholesalers and retailers, which accounted for c97% of the total sales for the nine months ended September 30th
, 2016,
rather than sales to large, key accounts. It is worthy to note that the management’s preference for the cash basis, rather than
the credit basis has been quiet apparent in the market shares by sales channels; Obour Land has the largest market share in
the small grocery shops (which mainly depend on cash basis and require less discounts), with a share of 49%, followed by
Domty with a share of 36%. Moreover, for the large grocery shops (which requires a mix of cash and credit terms and require
somehow relatively larger discounts) Domty has the largest market share of 49%, reflecting Domty’s acceptance of more
relaxed payment terms, followed by Obour Land’s market share of 30%. Additionally, as for the supermarkets / key accounts
(which mainly depend on credit basis and require the largest discounts), Domty has by far the largest market share of around
60% and Obour Land lags far behind with a quiet small share of 11%, reflecting the company’s reluctance with doing business
with key accounts.
The company’s management is considered very efficient with regards to its working capital, resulting in a one of the shortest
cash conversion cycles in the sector. The management prefers cash sales, rather than credit sales and consequently the
company has much lower receivables; either in absolute terms or days on hand, than its competitors. In 2015, the company
adopted a strategy for its inventory management, where the company would increase purchases and pile up inventories of
raw materials opportunistically when prices are relatively lower and use the stockpiled inventory when the prices are relatively
higher. This strategy has helped the company maintain very healthy margins throughout the periods where the competitors’
margins were hit severely.
Obour Land’s IPO took place on December 2016, where the company offered 80,000,000 existing shares (40% of the existing
share base) in a combined offering. The offering was entirely a secondary offering. The selling shareholders were Eng.
Mohamed Hamed Mohamed Sherif and his direct family members. The institutional offering was 7.38x covered, where
the retail offering was 1.94x covered and accordingly the total offering was covered 5.5x. The trading multiples of
Obour Land were very attractive at the beginning, as the company had a lower leading P/E multiple of 8x, in comparison to
that of Domty and Edita which had leading P/E multiples of 24.19x and 21x respectively at their IPOs. Currently the stock is
relatively undervalued, when valued using either the DCF valuation or the multiples valuation methodologies, where they both
entail an upside potential of 38.1% and 235% respectively.

3
JANUARY, 2017
Valuation:
- DCF Valuation:
We initiate our coverage for Obour Land for Food Industries - with a “Buy” rating driven from an upside
potential of 38.1%; driven from our estimated Fair Value of EGP 12.43 /share. Using the DCF valuation
methodology for Obour Land, we utilized an average WACC over our forecasted horizon of 19.01%, an average risk
free rate of 12.80%, and a market risk premium of 8%. We used the average F&B Sector Beta which is equivalent to
0.83.
Regarding the perpetual growth rate, we applied a multiple-stage growth
model:
- 2017 - 2021: we forecasted full financial statements, as the company
will witness hyper growth rates.
- 2022 - 2026: we assumed FCF to grow at a high rate of 10%.
- 2027 - Infinity: the terminal value of the company is based on a
perpetual growth rate of 5%.
2017 - 2021 2022 - 2026 2027 - Infinity
Hyper Growth
High
Growth
Stage
10% Sustainable
Growth
Stage
5%
Discounted Cash Flow Model (DCF) 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
NOPLAT 250,214 267,577 381,501 504,520 623,091
Depreciation 20,574 26,583 36,075 46,344 57,095
Gross Cash Flow 270,788 294,160 417,576 550,864 680,186
Change in Working Capital -75,224 -75,505 -31,237 -50,791 -20,030
Capex -94,915 -121,343 -139,825 -163,311 -178,106
Free Cash Flow 100,649 97,312 246,515 336,762 482,049 530,254 583,280 641,608 705,768 776,345
5,853,160
Terminal Value
Total Cash Flow 100,649 97,312 246,515 336,762 482,049 530,254 583,280 641,608 705,768 6,629,506
NPV 85,027 69,706 148,436 170,360 204,655 189,293 175,085 161,866 149,716 1,182,513
Value Of Operations 2,536,656
Add: Excess Cash 58,816
Entity Value 2,536,656
Less: Value of Debt 109,713
Less: Accum. Discounted
Minority Interest
Shareholder Value 2,485,759
DCF Value Per Share 12.43
Upside Risks:
- Ability to grow the company’s market share in the cheese
industry.
- Success of the new segments; mozzarella cheese,
spreadable cheese, milk and juice.
- Ability to raise prices more than our expectations and
improve profitability margins.
- Operating at utilization rates that are higher than our
expectations.
- Success in exports markets, helping to secure part / all of
the required FX.
- Becoming a part of an M&A transaction (either as an
acquirer or a target).
Downside Risks:
- Continuation of the FX crunch and the rise in the EGP-
USD rate.
- Increase in the prices of raw materials.
- Fierce competition from local, regional and foreign
investors and losing market share in any of the
company’s segments.
- Failure of any / all of the new product segments;
mozzarella cheese, spreadable cheese, milk and juice.
- Loss of the strong relation with Tetra Pak and other
suppliers.
- Inflationary pressures weakening the consumers’
purchasing power.

4
JANUARY, 2017
SOURCE: BLOOMBERG & PRIME
We believe that a multiple-stage growth model is more appropriate for sectors such as F&B and companies as Obour Land, 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 Obour Land.
- Multiples Valuation:
Value (EGP / Share) Upside Potential
100% DCF 12.43 38.11%
100% P/E Multiple 30.17 235.17%
50% DCF / 50% P/E Multiples 21.3 136.7%
Multiples valuation would imply that Obour Land is considered relatively undervalued and is currently trading at a discount.
Obour Land has a lower leading P/E ratio (7.44x) than its global (24.93x), regional (17.78x) and local peers (32.05x). Using
the leading P/E multiple for global peers, Obour Land’s FV would stand at EGP 30.17, implying a 235.2% upside potential.
Company Name P/E - 2017
Local F&B
Juhayna Food Industries 26.85
Edita Food Industries 32.30
Arabian Food Industries - Domty - 32.05
Sample Median - Local F&B 32.05
Company Name P/E - 2017
Regional F&B
Halwani Brothers Company 34.13
Almarai Co. 26.96
Agthia Group PJS 19.87
Kuwait Food Co. Americana Group 17.86
Mezzan Holding Co. 17.70
Jordan Dairy 16.83
Sadafco 15.43
Savola 14.95
Sample Median - Regional F&B 17.78
P/E - 2017
Global F&B
The Kraft Heinz Company 50.35
China Huishan Dairy Holdings 48.59
Bright Dairy & Food Co Ltd. 46.82
Prabhat Dairy 38.44
KMG Milk Food Ltd. 32.36
Bega Cheese 29.95
Danone 29.66
Rangpur Dairy & Food Products Limited 28.55
Mondelēz International, Inc. 26.54
Saputo Inc. 26.50
China Modern Dairy Holdings Ltd 26.41
Namyang Dairy Products Co Ltd. 23.44
Dairy Crest Group 22.17
Vietnam Dairy Products 21.93
Dutch Lady Milk Industries Berhad 21.68
Maeil Dairy Industry co 20.76
Fan Milk Limited 17.09
Kri Kri Milk Industry SA 16.35
Morinaga Milk 14.09
Megmilk Snow Brand Co Ltd. 12.75
Lacto Japan Co. Ltd. 8.30
China Dairy Corp. Ltd. 3.10
Sample Median - Global F&B 24.93

5
JANUARY, 2017
THE EGYPTIAN CHEESE MARKET - 2015-
SOURCE: OBOUR LAND
THE EGYPTIAN CHEESE MARKET - 2010-2015
SOURCE: OBOUR LAND
CONSUMPTION PER CAPITA (KG/ANNUM) - 2015 -
SOURCE: OBOUR LAND & DOMTY
The Egyptian Cheese Market:
Egypt’s per capita consumption of cheese is considered higher than the global average and the regional average, however, it
is considered relatively lower than that of the more developed markets, such as North America and Western Europe.
Cheese is an Egyptian household staple, as it is considered an
affordable source of protein. It is the largest segment in the
Egyptian dairy market, where it constitutes over 50% of the total
dairy market. The Egyptian cheese market can be divided into two
major product categories: unprocessed cheese (c84% of the total
cheese market) and processed cheese (c16% of the total cheese
market). The unprocessed cheese can be further sub-categorized
into unprocessed hard cheese (c45% of the total cheese market)
and unprocessed soft cheese (c39% of the total cheese market).
During the past several years, the unprocessed soft cheese has
exhibited the fastest growth among all the cheese sub-categories
and it is expected that the unprocessed soft cheese market will
grow at the expense of the unprocessed hard cheese market due to
the complexities required to produce and distribute the
unprocessed hard cheese.
The Egyptian cheese industry has enjoyed steady growth, with a
CAGR of c13% during 2010-2015, where its value stood at EGP
12.9bn by the end of 2015.
Processed
Cheese, 16%
Unprocessed
Soft Cheese ,
39%
Unprocessed
Hard Cheese ,
45%
EGP Mn. 2010 2011 2012 2013 2014 2015
2010 - 2015
CAGR %
Unprocessed Soft Cheese 2,175 2,555 3,007 3,518 4,137 5,084 18.5%
Unprocessed Hard Cheese 3,598 3,927 4,313 4,702 5,130 5,837 10.2%
Processed Cheese 1,154 1,276 1,422 1,581 1,756 2,008 11.7%
Total 6,927 7,758 8,742 9,801 11,022 12,930 13.3%
y-o-y Growth (%) - 12.0% 12.7% 12.1% 12.5% 17.3%
13.8
9.4
5.7
5.1
3.5
3
2.5 2.3 2.3
1.6
0
2
4
6
8
10
12
14
16
France Italy USA Egypt Turkey KSA South
Africa
UAE Algeria Bahrain
11.4 11.1
5.2 5.1 4.9
1.4
0.2
2.4
0
2
4
6
8
10
12
Western
Europe
North
America
Eastern
Europe
Egypt Latin
America
Middle East
& Africa
Asia Pacific World

6
JANUARY, 2017
CHEESE DEMAND IN EGYPT
SOURCE: OBOUR LAND
CARTON PACK MARKET SIZE (‘000S TONS) &
CONSUMPTION PER CAPITA (KG /CAPITA / ANNUM)
SOURCE: OBOUR LAND
The growth in the cheese industry in the last decade has been driven by several factors and we believe that the same factors
will lead to the further growth of the industry in the coming years. These factors include:
It is worthy to note that the white cheese market in Egypt is dominated by grocery shops that cater the on-the-go
consumption patterns; c90% of Egyptian cheese sales is estimated to have occurred through these traditional retailers in
2015, with approximately 40% being from large grocery shops and 50% being from small grocery shops. However, modern
trade channels, including modern grocery retailers with sufficient refrigeration capabilities, remain essential for certain product
categories that require special storage conditions, typically fresh cheeses such as mozzarella cheese, spreadable cheese and
other plastic pack cheeses.
- Consumer shift from loose to packaged cheese: Most of
Egypt’s cheese production has historically been locally produced,
non-packaged cheese, referred to as ‘‘loose’’ cheese. Such loose
cheese has been scientifically associated with various health and
hygiene issues, mainly due to the relatively unregulated
production and distribution processes used for it. Cheese
consumption has been shifted from loose cheese to packaged
cheese products in the last decade to a large extent, due to the
rising urbanization and increased consumer awareness. The shift
has also been driven by the convergence of the price differential
between loose and packaged cheese, where the packaged cheese
producers have been able to benefit from huge economies of
scale. This has been reflected in the loose cheese market share
declining from 72% in 2007 to 25 – 30% of the overall
unprocessed soft white cheese market in 2015.
- Innovative product offering: The Egyptian cheese market
offers a wide variety of SKUs covering different tastes, sizes and
price ranges in order to fulfill the needs of the mass consumers.
During the last decade, consumers have shown preference for
smaller, more affordable SKUs. Also, the carton pack cheese
has contributed to market growth by facilitating the
product handling and the storage process for both,
retailers and consumers.
- Adoption of western eating habits: During the last decade,
Egyptian consumers have been increasingly adopting westernized
eating habits. The number of western-style food restaurants has
been steadily growing during the past few years and the rising
consumption of western-style meals such as pizza, burgers and
pasta (where cheese is a key ingredient) has led to an increase in
cheese sales.
- Consumption patterns: The urban lifestyle has become
increasingly busier as a result of family members spending more
time far from home, the growing numbers of students, the
increasing female participation in the workforce and longer
commute times, where all of these factors have driven an ‘‘on-the-
go’’ consumption trend. Cheese has been marketed as an ‘‘on-the-
go’’ snack due to its innovative and small packaging, making it
suitable for rapid consumption. Cheese has increasingly been
positioned as both a third meal option during the day and a meal-
replacement snack because it is an affordable, filling snack with a
variety of flavors.
72%
25-30%
28%
70-75%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2007 2015
Loose Cheese Packaged Cheese
61.5
81
96.8
103.5
145.6
171.8
182.1
219.5
252.7
0.8
1.1
1.2
1.3
1.8
2.0
2.1
2.5
2.8
0
0.5
1
1.5
2
2.5
3
0
50
100
150
200
250
300
2008 2009 2010 2011 2012 2013 2014 2015 2016E
Carton Pack Market Size
Carton Pack Consumption per Capita

7
JANUARY, 2017
UNPROCESSED SOFT CHEESE – EGP MN .
CARTON PACK CHEESE - MARKET SHARES – 9M2016
UNPROCESSED HARD CHEESE – EGP MN .
SOURCE: OBOUR LAND
- Unprocessed Cheese:
Unprocessed cheese is the most prevalent type of cheese in the local Egyptian market, where it constituted c84% of the total
cheese market in 2015.
* Unprocessed Soft Cheese:
* Unprocessed Hard Cheese:
2,175
2,555
3,007
3,518
4,137
5,084
17% 18% 17%
18%
23%
0
0.05
0.1
0.15
0.2
0.25
0
1,000
2,000
3,000
4,000
5,000
6,000
2010 2011 2012 2013 2014 2015
EGP Mn. y-o-y Growth (%)
Unprocessed soft cheese is packaged in either traditional plastic
packaging, such as plastic tubs, or carton packs. As the plastic pack
cheese is typically sold fresh, it has special handling and storage
requirements. Consequently, the plastic pack cheese is typically
consumed in homes or restaurants with sufficient refrigeration capacity.
On the other hand, the carton pack cheese has a relatively long shelf-
life, making it a better alternative as an easily carried food item that
can be consumed anywhere at any time.
The unprocessed soft cheese market in Egypt has nearly doubled in
recent years, growing to more than EGP 5.1bn by 2015. This growth
has largely been driven by rapid increase in carton pack cheese sales
due to carton pack cheese’s attractiveness as a convenient on-the-go
food and its ability to be sold through a wider array of sales channels
than plastic pack cheese.
The competitive landscape of the Egyptian cheese industry has
changed significantly during the recent years, as a result of the rapid
growth of carton pack cheese products. Major producers, such as
Domty and Obour Land had a long-term vision, as they predicted the
shift to the conveniently consumed cheese products. Both companies
began offering carton pack cheese products in 2007 and they continued
to increase their production capacity of carton pack cheese in the
following years. As Domty and Obour Land were able to anticipate and
capitalize on the increasing consumer demand for carton pack cheese
products, they were able to expand their market share for the
packaged white cheese and this came at the expense of earlier market
leading brands (such as Americana’s Greenland). The largest producers
of unprocessed carton pack cheese in Egypt in the nine months ending
September 30, 2016 by sales value were Domty (market share: 43%),
Obour Land (market share: 39%), Greenland (market share: 5%) and
Panda (market share: 4%).
On the other hand, the unprocessed plastic pack cheese has more
restrictive requirements and thus has grown less rapidly than carton
pack cheese during the last years. President has always had the largest
market share of the unprocessed plastic pack cheese with a share of
more than 50%, followed by Domty with a share of 20-25%.
Domty , 43%
Obour Land,
39%
Americana -
Green Land,
5%
Arab Dairy,
Panda, 4%
Best - Teama
& President ,
2%
Others, 7%
The unprocessed hard cheese is the largest segment of the Egyptian
cheese market, where it represents nearly 45% of the total Egyptian
cheese market. The unprocessed hard cheese market in Egypt stood at
EGP 5.8bn by the end of 2015 and it grew at a CAGR of nearly 10%
during 2010-2015. The most common type of Egyptian hard cheese is
the unbranded Roumy cheese, where it is manufactured locally and it
constitutes approximately 80% of Egyptian hard cheese market with the
remainder consisting of more expensive imported hard cheese brands
that are typically considered unaffordable to the mass market
customers.
3,598
3,927
4,313
4,702
5,130
5,837
9%
10%
9%
9%
14%
0
0.02
0.04
0.06
0.08
0.1
0.12
0.14
0.16
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2010 2011 2012 2013 2014 2015

8
JANUARY, 2017
PROCESSED CHEESE – EGP MN .
SOURCE: OBOUR LAND
The unprocessed hard cheese is sold mainly by smaller companies. The management of Obour Land believes that the
production process and the sale of unprocessed hard cheese are very complicated. The complexity in production is mainly due
to the necessity for manual intervention during the production process. As for the storage and handling, the production of
unprocessed hard cheese requires storage of the final product in temperature-regulated warehouses at 15 degrees Celsius for
approximately six months prior to sale, which the management believes that it could negatively affect the company’s liquidity
and cash conversion cycle. Moreover, since the milk used for unprocessed hard cheese is not pasteurized during the
production process, control over quality and consistency of the final product is difficult.
- It is worthy to note that Obour Land’s main competitor – Domty – has announced their plans to penetrate
the unprocessed hard cheese segment by 2017, through the production of Roumy cheese using pasteurized
milk. Production is expected to begin in early 2017, at an estimated cost of EGP 25mn, with a production capacity of
3,000tpa. Even though production is expected to begin by early 2017, the product will not be available for sale before July /
August 2017, as the hard cheese must be stored at least for 6 months after production to be suitable for the consumers’
preferences.
 Sales Channels for Unprocessed Cheese:
Since the plastic pack cheese products require chilled storage and distribution facilities, their available sales channels are
generally limited to the modern retail stores and similar retail channels with adequate refrigeration capabilities.
On the other hand, the carton pack cheese products, which have easier handling and distribution requirements, are distributed
through more diverse and flexible sales channels, including traditional grocery stores and kiosks without refrigeration and to
more remote locations.
Unprocessed hard cheese is sold in both traditional and modern groceries, but they have special storage requirements. It is
usually purchased by supermarkets in bulks and then sold to consumers by weight.
- Processed Cheese
1,154
1,276
1,422
1,581
1,756
2,008
11%
11%
11%
11%
14%
0
0.02
0.04
0.06
0.08
0.1
0.12
0.14
0.16
0
500
1,000
1,500
2,000
2,500
2010 2011 2012 2013 2014 2015
By the end of 2015, the processed cheese constituted c16% of the
total Egyptian cheese market, where it stood at more than EGP 2bn.
Processed cheese is a more niche product, as it mainly targets
consumers with westernized eating habits. The prices of processed
cheese have always been relatively high as the target market for this
product is less broad. The processed cheese market has also grown
in recent years driven by the increase of westernized eating habits in
Egypt, but this growth has also been constrained by a limited
number of modern sales channels equipped with cold storage
capabilities.
As for the market shares for the processed cheese, President has the
largest market share of nearly 67.5%, followed by Domty with a
share of 15%.
 Sales Channels for Processed Cheese:
As processed cheese products require chilled storage and
distribution, the lack of a well-developed retail environment with a
cold chain infrastructure has been a huge impediment in the
distribution of processed cheese products and the growth of the
processed cheese market).

9
JANUARY, 2017
SOURCE: OBOUR LAND
OFFERING STRUCTURE
SOURCE: PRIME
Obour Land for Food Industries:
IPO:
The institutional offering was 7.38x covered, where the retail offering was 1.94x covered and accordingly the
total offering was covered 5.5x. Relative to other IPOs in the F&B sector during the last several years, Obour Land’s
coverage for the institutional tranche was better than most of the previous IPOs, while the retail tranche lagged behind as the
coverage was relatively low.
Shares Owned Immediately
Prior to the Offering
Shares Owned Immediately
Following the Offering
No. % No. %
Mohamed Hamed Mohamed Sherif 81,000,000 40.5% 48,600,000 24.3%
Ashraf Mohamed Hamed Mohamed Sherif 45,000,000 22.5% 27,000,000 13.5%
Samya Elshafei Sadek Elkafrawy 10,000,000 5% 6,000,000 3%
Ayman Mohamed Hamed Mohamed Sherif 34,000,000 17% 20,400,000 10.2%
Ghada Mohamed Hamed Mohamed Sherif 10,000,000 5% 6,000,000 3%
Rasha Mohamed Hamed Mohamed Sherif 10,000,000 5% 6,000,000 3%
Abeer Mohamed Hamed Mohamed Sherif 10,000,000 5% 6,000,000 3%
Other investors in the combined offering -
(Free Float) 0 0% 80,000,000 40%
Total 200,000,000 100% 200,000,000 100%
1.75x
6.79x
0
5
10
15
Institutions Retail
Juhayna Food Industries - JUFO
- 2010
13.4x
4.5x
0
5
10
15
Institutions Retail
Edita Food Industries - EFID -
2015
5.5x
10.7x
0
5
10
15
Institutions Retail
Arabian Food Industries - Domty -
DOMT - 1Q2016
7.38x
1.94x
0
5
10
15
Institutions Retail
Obour Land for Food Industries -
4Q2016
Obour Land for Food Industries offered 80,000,000 existing shares (40% of
the existing share base) in a combined offering. The combined offering was
compromised of: (i) An International Offering – (c56,000,000 shares –
70% of the total offering) to institutions in a number of countries, including
Egypt, through a private placement and (ii) an Egyptian Retail Offering –
(24,000,000 shares – 30% of the total offering) to the public in Egypt.
The offering was entirely a secondary offering. The selling shareholders
were Eng. Mohamed Hamed Mohamed Sherif and his direct family members.
The purpose of the offering was to further institutionalize the business
through the introduction of new shareholders, penetrate the capital market
for future possible investments and also to provide a partial exit for the
selling shareholders.
Institutional
Offering -
56mn shares -
28% of the
share base -
70% of the
total offering
Retail
Offering -
24mn shares -
12% of the
share base -
30% of the
total offering
Original
Shareholders
- 120mn
shares -
60% of the
share base

10
JANUARY, 2017
SOURCE: OBOUR LAND
MAJOR F&B STOCKS’ PERFORMANCE – 2016 & 2017
SOURCE: BLOOMBERG
TRANSACTION TIMELINE
It was announced on December 5th
that the IPO would have a price range of EGP 9.00-9.68 /share. By the end
of the institutional offering, the shares were priced at EGP 9.68 /share, putting it at the top end of the price
range and giving the company an initial market capitalization of EGP 1.936bn. Trading commenced on December
15th
, at an opening price of EGP 9.70 /share.
The trading multiples of Obour Land were very attractive at the beginning, as the company had a lower leading P/E multiple
of 8x, in comparison to that of Domty and Edita which had leading P/E multiples of 24.19x and 21x respectively at their IPOs.
In addition to the relatively attractive multiples, foreign investors have always showed huge interest in the F&B sector. Such
an interest was quiet positive for the IPO, as it took place after the EGP floatation, which witnessed massive appetite from
global and regional investors, where they have been considered net buyers since then. On the other hand, the retail offering
was not as good as the international offering with respect to the coverage. The low appetite of retail investors was mainly due
to several reasons, including: (i) the poor performance of the major F&B stocks since the beginning of 2016, (ii) the weak
financial results of F&B companies during the 9M2016, (iii) the weak performance of the latest F&B IPO of Arabian Food
Industries – Domty and (iv) local retail clients have been net sellers since the EGP floatation. The stock’s price has
deteriorated since the IPO, reaching EGP 9.00/share, declining by c.7%.
Stabilization Fund: There were no stabilization activities for the international offering. Meanwhile, for the retail offering, the
selling shareholders financed an amount equivalent to 15% of the gross proceeds of the combined offering (50% of the retail
offering) at the offer price and made it available to the IPO’s coordinator one day prior to the commencement of trading. Post
the stabilization period, the IPO’s coordinator matched the purchase and sales orders of 9.69mn stocks at the offer price of
EGP 9.68/share.
November-16 December-16
Week 1 Week 2 Week 3 Week 4
20th Nov. - 26th Nov. 27th Nov. - 3rd Dec. 4th Dec. - 10th Dec. 11th Dec. - 17th Dec.
Institutional Offering
24th Nov. - 9th Dec.
Management Roadshow - Institutional Book-building
Retail Offering
5th Dec. - 13th Dec.
Retail Offering
Execution and Closing
14th Dec. - 15th Dec.
Execution on the EGX
Commencement of Trading
0
5
10
15
20
25
Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17
JUFO EFID OLFI DOMT
EGP Floatation
OLFI Price (%)
2016 -6%
2017 +1%
JUFO Price (%)
2016 -21%
2017 -1%
EFID Price (%)
2016 -10%
2017 +2%
DOMT Price (%)
2016 -29%
2017 +2%
EGP

11
JANUARY, 2017
SOURCE: OBOUR LAND
OBOUR LAND – PRODUCTION CAPACITIES - TIMELINE
Company Overview:
Obour Land for Food Industries was founded by Eng. Mohamed Hamed Sherif and Mr. Ashraf Hamed Sherif. The company
commenced operations in 1999 with a single production line, with the capacity to produce 400kg per day of loose white
cheese in plastic tubs, with four plastic tub SKUs. It introduced its first Tetra Pak product in 2007, where it currently operates
12 Tetra Pak production lines producing 350-400 tons of white cheese per day. By the end of 2016, the company had an
annual production capacity of 134.4 thousand tons and had 27 different SKUs in its portfolio. The company is currently
installing 9 new production lines; 3 carton pack cheese production lines, 1 mozzarella cheese production line, 1 spreadable
cheese production line, 1 milk production line and 3 juice production lines, where all these production lines are expected to be
operational by 2Q2017. After the capacity additions, the company is expected to have a cheese production capacity of 206.8
thousand tons per annum, a juice production capacity of 99 million liters per annum and a milk production capacity of 27
million liters per annum.
Product Mix:
Obour Land began its operations in 1999 with a single production line of loose white cheese. The production line had a
capacity of 400kg per day, where all the production was for the plastic tub cheese. In 2007, the company’s management
foresaw the change in the consumption patterns, where it introduced its first Tetra Pak carton pack cheese product. Since
then, the company focused on expanding its product offerings, through introducing different sizes and flavors. The company
began producing carton pack cheese products in 2007 through 2 production lines with 2 SKUs; 500gm and 250gm, which
enlarged the annual production capacity for the company to reach 33.3 thousand tons, including 4.1 thousand tons for the
plastic tubs. In 2011, the company added 2 production lines; an additional production line for the 250gm SKU and it also
introduced the 125gm SKU, increasing the company’s annual production capacity to 50.2 thousand tons. In 2013, the
company added 3 new production lines; one line for the 125gm SKU and two lines for the 250gm SKU, increasing the
company’s annual production capacity to 80.6 thousand tons. In 2014, the company added a single production line for the
500gm SKU, with aa annual production capacity of 18 thousand tons. In 2015, the company added three production lines; one
production line for the 125gm SKU, one production line for the 250gm SKU and a production line for the 80gm SKU which was
introduced to the market at that time. By the end of 2015, the company’s annual production capacity reached 120.9 thousand
tons. In 2016, the company added a single production line, where it was for the 250gm SKU, increasing the annual production
capacity to 134.4 thousand tons. The company currently operates 13 production lines, where it offers 27 different SKUs,
including carton pack cheese products ranging from 80gm to 500gm and plastic tubs ranging from 400gm to 12kg. The 13
production lines are operated at the company’s 6,120sqm production facility, which is located on its 26,412sqm land which is
owned by the company. The company plans to use the unutilized land to further expand the current production capacities with
new and existing products.
Production Line
Plastic
Tubs
Tetra
Pak -
Line 1
Tetra
Pak -
Line 2
Tetra
Pak -
Line 3
Tetra
Pak -
Line 4
Tetra
Pak -
Line 5
Tetra
Pak -
Line 6
Tetra
Pak -
Line 7
Tetra
Pak -
Line 8
Tetra
Pak -
Line 9
Tetra
Pak -
Line 10
Tetra
Pak -
Line 11
Tetra
Pak -
Line 12
Total
Capacity
- End of
2016
Launch Date 1999 2007 2007 2011 2011 2013 2013 2013 2014 2015 2015 2015 2016
134.4
KTPAPackage Size - 500gm 250gm 250gm 125gm 125gm 250gm 250gm 500gm 125gm 80gm 250gm 250gm
Annual Capacity (KTPA) 4.1 18.0 11.3 11.3 5.6 5.6 11.3 13.5 18.0 6.8 4.3 11.3 13.5

12
JANUARY, 2017
EXPECTED ADDITIONAL CAPACITIES – KTPA – WHITE CHEESE
EXPECTED ADDITIONAL CAPACITIES – KTPA –
MOZZARELLA & SPREADABLE CHEESE
EXPECTED ADDITIONAL CAPACITIES – MN LITERS–
JUICE & MILK
SOURCE: OBOUR LAND
Expansion Plans:
During 2017, the company plans to leverage its strong brand and its operational platform. The company targets to further
expand its production capacities for the Tetra Pak carton pack cheese, in addition to its plan to penetrate the markets of
mozzarella cheese , processed cheese, milk and juice.
 White Cheese: the company plans to further expand its white
cheese business through adding 3 new production lines; one line
for the 250gm SKU, one line for the 500gm SKU and the
remaining line would go for a new SKU size of 1kg. The 3 lines
would have an annual production capacity of 65.3 thousand
tons. In 2016, the company entered into an agreement with
Tetra Pak to provide the equipment to build the production lines
at a cost of EUR 0.9mn and it has been fully paid. The new
production lines have been installed and the production trials are
expected to begin in 1Q2017.
 Mozzarella and Spreadable (Processed) Cheese: the
company plans to introduce 2 production lines of mozzarella
cheese and spreadable cheese with a combined capacity of 7.2
thousand tons (3.6 thousand tons each). Unimac-Gherri SRL will
supply the equipment for the mozzarella cheese production line
at a cost of EUR 0.35mn and it has been fully paid. Meanwhile,
Trepko A/S and Karl Schnell GmbH & Co. will supply the
equipment for the spreadable cheese production line, at a cost of
EUR 1.35mn and it also has been fully paid. The 2 production
lines are expected to become operational by 2Q2017.
 Juice & Milk: the company plans to venture into two new
segments; juice and milk, as the company believes that these
segments would complement the company’s product offering.
The company plans to add 3 new Tetra Pak juice production
lines with an annual capacity of 99 million liters and a single
Tetra Pak milk production line with an annual production
capacity of 27 million liters. It is worthy to note that the 3 juice
production lines can be used interchangeably between juice and
milk, however, the company plans to initially use the 3
production lines exclusively for juice production and the fourth
production line would be used exclusively for milk production.
The company entered into an agreement with Tetra Pak in 2016
in order to execute the expansion plans for the juice and milk
segments at a cost of USD 7.5mn. The company has already
paid c20% to Tetra Pak, while the remaining amount would be
paid over 4 years after the commencement of production. The
juice and milk production lines are expected to become
operational by 2Q2017.
11.3
18
36
65.3
0
10
20
30
40
50
60
70
250gm 500gm 1kg Total White
Cheese
Fully Paid - EUR 0.9mn
3.6 3.6
7.2
0
1
2
3
4
5
6
7
8
Mozzarella
Cheese
Spreadable
Cheese
Total Mozzarella &
Spreadable
Cheese
Fully Paid - EUR 1.7mn
9
36
54
99
27
0
20
40
60
80
100
120
Juice 200ml Juice 250ml Juice 1L Total Juice Milk 500ml
Fully Financed -
USD 7.5mn

13
JANUARY, 2017
PRODUCTION LINES & PRODUCTION CAPACITIES
SOURCE: OBOUR LAND
LAND PLOTS LOCATION
LAND PLOTS OVERVIEW
SOURCE: OBOUR LAND
After the previously mentioned capacity additions, the company would have a cheese production capacity of 206.8
thousand tons per annum, a milk production capacity of 27 million liters per annum and a juice production capacity
of 99 million liters per annum.
Production Facility and Property:
2013 2014 2015 2016 2017E
Number of production lines 8 9 12 13 22
Carton pack cheese (Thousand Tons) 76.5 94.5 116.8 130.3 195.6
Plastic tub cheese (Thousand Tons) 4.1 4.1 4.1 4.1 4.1
Mozzarella cheese (Thousand Tons) - - - - 3.6
Spreadable cheese (Thousand Tons) - - - - 3.6
Total cheese (Thousand Tons) 80.6 98.6 120.9 134.4 206.8
Milk (Mn Liters) 0 0 0 0 27
Juice (Mn Liters) 0 0 0 0 99
Production Facility: the company owns 7 land plots in
Obour City (East Cairo), with a total area of 26,412sqm.
Only 2 land plots are used for the production of white
cheese and the remaining 5 land plots will be used either for
the production of the new products or storage. The 9
additional production lines will be housed in 3 different
buildings in the main facility. Even after the new expansion
plans, the company would still have an additional land bank
of 14,172sqm, which may be used in the future for further
expansion plans.
Area 12 Area 13 Area 14 Area 15 Area 16 Area 14 (2) Area 7&8
Acquisition Date 2007 2011 2013 1998 2012 2015 2015
Land Area (sqm) 3,060 3,060 3,060 3,060 3,060 5,000 6,112
BUA (sqm) 6,512 7,704 6,453 5,738 4,251 3,074 7,102
Status
Fully Utilized Under Utilized Under Construction
Under
Construction
Under
Construction
Under
Construction
Under
Construction
Usage
Eight production
lines of soft
cheese
(125gm, 250gm
and 500gm)
Head Office
+ four production
lines of soft cheese
(80gm, 125gm,
250gm)
+ three new
production lines of
soft cheese
(250gm, 500gm and
1kg)
Will be utilized for
the production of
juices (200ml, 250ml
and 1l) and milk
(500ml)
Being revamped
to be utilized for
the production
of spreadable
cheese and
mozzarella
cheese
Ground floor
is used as
storage space
Ground floor
is used as
storage space
Ground floor
is used as
storage space

14
JANUARY, 2017
SOURCE: OBOUR LAND
DIRECT RAW MATERIALS - CHEESE PRODUCTION - 9M2016
Additional Land: the company also owns a land plot of 3,875sqm in the 6th
of October industrial city in West Cairo
and another land plot of 396sqm in the Borg El Arab industrial zone in Alexandria.
Supply & Production
Production Value Chain:
The company’s production value chain consists of six elements; (1) planning, (2) raw materials procurement (3)
inspection (4) raw materials inventory management (5) production and (6) warehousing.
1. Planning: This is the step where the company sets the production plan. According to the production plan,
strategic and safety stocks of each raw material are determined and acquired.
3. Inspection: The inspection process occurs at the same time with the on-going purchasing process. Materials
are inspected according to the company’s internal standards, in addition to strict international quality standards.
Any raw materials that fall below the standards, either the internal or international standards, are returned back
to their respective suppliers.
4. Raw materials inventory management: After the inspection, the raw materials are transferred to the
storage warehouses and then allocated to the production process depending on the anticiapted demand.
5. Production: The company produces all of its products at its facility at Obour City. Currently, the facility has 13
production lines, where 12 are Tetra Pak production lines that are used for the production of the carton pack
cheese and the remaining production line is used for the production of the plastic tub cheese. The facility
produces an average of 400 tons of cheese per day, operating 20 hours per day in two and a half, eight hour
shifts per day and is generally open six days per week. During busier periods, the facility is operated
continuously. During the 9M2016, the company’s production lines operated at a total weighted utilization rate of
79%. The company plans to add 9 new production lines in 2017, where they are all expected to be operational
by 2Q2017. The utilization rate for the new production lines in their first operational year will vary, depending on
the product category and the SKU size; the highest utiilization rate is expected to be for the 250gm carton pack
cheese, as it is the company’s most demanded SKU and the existing production lines for that SKU has operated a
very high utilization rate during the 9M2016, 84%. After the first year of operations, the utilization rates for the
new production lines are expected to increase at fast rates, yet it would depend on the demand of the exisiting
product and the success of the new products.
SMP and
MPC , 48%
Butter, 19%
Oils, 18%
GDL, 4%
Others , 11%
2. Raw materials procurement: The company uses a diversified
group of suppliers from a wide range of local and international
sources to satisfy the company’s main raw material requirements.
For each raw material, the company has several approved
suppliers, in order to ensure better raw material quality and cost
effifciency. The company’s main raw materials include (1) the
materials required for the production of cheese, namely; the
skimmed milk powder (SMP), the milk protein concentrate (MPC),
natural butter and palm oil and (2) the materials needed for the
packaging of the company’s products. It is worthy to note that
the company has a huge FX exposure of c70% and the
company’s exports are very minimal (less than 1% over
the past several years), so the exports sales barely cover
any FX requirements. The company entirely imports skimmed
milk powder, natural butter, milk protein concentrates and the
Tetra Pak packaging materials. On the other hand, the company
sources palm oil and the outer cartons from the local market.

15
JANUARY, 2017
SOURCE: OBOUR LAND
EXPECTED UTILIZATION RATES FOR THE NEW PRODUCTION LINESUTILIZATION RATES - 9M2016
6. Warehousing: After the production process is complete, the products are transported to the company’s
warehouse for storage prior to their distribution.
Equipment:
The company sources its equipment form leading specialized manufactures, including Tetra Pak. Tetra Pak is the
company’s main supplier of packaging and machinery, which the company uses for it’s carton pack cheese products.
Since the company’s introduction of the carton pack products in 2007, the company has been able to keep adding
and integrating new Tetra Pak lines to its product offerings. In 2016, Obour Land has been awarded a certificate
naming it the fastest growing customer in Egypt during 2010-2015. The company enjoys special technical and
financial benefits from Tetra Pak, including:
 Favorable payment terms for equipment; where the company is given the option to purchase new Tetra
Pak machines on preferential terms through installments over several years and they can be set off against
receivables due to the company from Tetra Pak and therefore would result in no cash outflow.
 Cash discounts and discounts on the packaging materials procured, up to 20%.
 Growth support; whereby the company negotiates a discount at the time it purchases new equipment from
Tetra Pak, which can be up to 35% of the new equipment’s cost, where the discount arrangement is tied to the
volume of packaging material to be procured for use with the new piece of equipment.
 Marketing support payable as a percentage of the company’s related marketing budget, yet it is
subject to a cap.
 Installation of new Tetra Pak production lines at no cost to the company.
22%
75%
84%
77%
104%
79%
0%
20%
40%
60%
80%
100%
120%
80gm
Carton
Pack
125gm
Carton
Pack
250gm
Carton
Pack
500gm
Carton
Pack
Plastic Tub Overall
Utilization
Production Line Annual Capacity Operational Year 1 Operational Year 2
250gm Carton Pack 11.3 Thousand Tons 75% --
500gm Carton Pack 18 Thousand Tons 40% --
1kg Carton Pack 36 Thousand Tons 15% 25%
Mozzarella Cheese 3.6 Thousand Tons 20% 30%
Processed Cheese 3.6 Thousand Tons 15% 25%
Milk 27 Million Liters 20% 30%
Juice 99 Million Liters 25% 40%

16
JANUARY, 2017
DELTA – POPULATION SIZE: 32,171,176
UPPER EGYPT – POPULATION SIZE: 26,985,650
GREATER CAIRO – POPULATION SIZE: 22,418,612
Sales & Distribution Network:
With regards to the Carton Pack White Cheese, Obour Land is considered to have the largest market
share by Brand and the second largest market share by Company.
By Brand: Obour Land enjoys the largest market share by brand in Egypt, with a leading position in the country’s
two most populous regions; the Delta and the Upper Egypt regions. Even though Obour Land lags behind its main
competitor, Domty, in Greater Cairo and Alexandria, it has shown a faster growth since 2013 till September 2016, as
Obour Land’s market share grew in Greater Cairo from 12% to 32% and in Alexandria from 7% to 16%. As for the
Canal Zone region, Obour Land has been the market leader with a market share of more than 50% in 2013 and it
has even been able to enlarge its market share reaching 62% in 9M2016. Obour Land’s brand has become the
country’s top carton pack cheese producer in Egypt during 2016 with a market share of 39%.
47%
25%
6% 8%
4%
0% 1%
53%
21%
6% 5% 4% 3%
0%
56%
25%
4% 4% 3% 1% 0%
54%
28%
2%
5% 4%
0% 0%
0%
10%
20%
30%
40%
50%
60%
Obour Land Domty Greenland Panda Gebnety (Domty) Damo (Domty) President
2013 2014 2015 9M2016
19%
26%
13%
9%
12%
1% 1%
24%
28%
12%
4%
12%
2%
0%
27%
30%
8%
2%
14%
3%
0%
35%
29%
4% 3%
12%
2%
0%
0%
5%
10%
15%
20%
25%
30%
35%
40%
2013 2014 2015 9M2016
12%
44%
25%
9%
3%
0%
4%
18%
43%
23%
6% 4%
1% 1%
23%
46%
13%
7% 5%
1% 0%
32%
46%
6% 5% 4%
0% 0%
0%
10%
20%
30%
40%
50%
2013 2014 2015 9M2016

17
JANUARY, 2017
ALEXANDRIA – POPULATION SIZE: 4,901,910
CANAL ZONE – POPULATION SIZE: 2,525,068
TOTAL EGYPT – POPULATION SIZE: 90,086,267
SOURCE: OBOUR LAND
7%
36%
16%
25%
2% 0%
3%
11%
43%
12%
19%
3% 1% 1%
15%
54%
7%
12%
4%
0% 1%
16%
64%
5% 7%
1% 0% 0%
0%
10%
20%
30%
40%
50%
60%
70%
2013 2014 2015 9M2016
54%
7%
17%
6% 4% 1% 3%
60%
12%
17%
4% 2% 0% 0%
66%
20%
8%
1% 1% 0% 1%
62%
25%
8%
1% 1% 0% 0%
0%
10%
20%
30%
40%
50%
60%
70%
2013 2014 2015 9M2016
23%
33%
16%
9%
6%
0%
2%
29%
33%
15%
6% 6%
2%
0%
33%
36%
9%
5%
7%
1% 0%
39%
36%
5% 4%
6%
1% 0%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
2013 2014 2015 9M2016

18
JANUARY, 2017
DELTA – POPULATION SIZE: 32,171,176
UPPER EGYPT – POPULATION SIZE: 26,985,650
GREATER CAIRO – POPULATION SIZE: 22,418,612
By Company: When the market shares are analyzed in terms of the producing companies and not brands, Obour
Land would be ranked in the second place with a market share of 39%, where Domty would have the largest market
share in Egypt, with a market share of 43%. In 2012, Domty launched 2 new fighter brands; Gebnety and
Damo, targeting the lower-income consumers, where they have been quiet successful, especially in the
regions where citizens usually have lower purchasing power. Even though Obour Land has the second
largest market share, it is worthy to note that Obour Land has shown quiet a robust growth in the past years; Obour
Land’s market share grew from 23% in 2013 to 39% in 9M2016, while on the other hand, Domty’s market share was
quiet static as it only grew from 39% in 2013 to 43% in 9M2016.
47%
29%
6% 8%
1%
53%
28%
6% 5%
0%
56%
29%
4% 4%
0%
54%
32%
2%
5%
0%
0%
10%
20%
30%
40%
50%
60%
Obour Land Domty Greenland Panda President
2013 2014 2015 9M2016
19%
39%
13%
9%
1%
24%
42%
12%
4%
0%
27%
47%
8%
2%
0%
35%
43%
4% 3%
0%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
2013 2014 2015 9M2016
12%
47%
25%
9%
4%
18%
48%
23%
6%
1%
23%
52%
13%
7%
0%
32%
50%
6% 5%
0%
0%
10%
20%
30%
40%
50%
60%
2013 2014 2015 9M2016

19
JANUARY, 2017
SOURCE: OBOUR LAND
ALEXANDRIA – POPULATION SIZE: 4,901,910
CANAL ZONE – POPULATION SIZE: 2,525,068
TOTAL EGYPT – POPULATION SIZE: 90,086,267
7%
38%
16%
25%
3%
11%
47%
12%
19%
1%
15%
58%
7%
12%
1%
16%
65%
5% 7%
0%
0%
10%
20%
30%
40%
50%
60%
70%
2013 2014 2015 9M2016
54%
12%
17%
6%
3%
60%
14%
17%
4%
0%
66%
21%
8%
1% 1%
62%
26%
8%
1% 0%
0%
10%
20%
30%
40%
50%
60%
70%
2013 2014 2015 9M2016
23%
39%
16%
9%
2%
29%
41%
15%
6%
0%
33%
44%
9%
5%
0%
39%
43%
5% 4%
0%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
2013 2014 2015 9M2016

20
JANUARY, 2017
SOURCE: OBOUR LAND
SALES CHANNELS OVERVIEW OBOUR SALES CHANNELS BREAKDOWN
SALES CHANNELS BREAKDOWN – WHITE CHEESE MARKET
SOURCE: OBOUR LAND
The company has an extensive sales and distribution network throughout Egypt. As for the distribution network, the company
has 11 direct distribution branches (including the company’s headquarters in Obour city) in 11 governorates, where they
distribute the company’s products in 24 governorates. In addition to the direct distribution network, the company also relies
on indirect distribution through wholesalers covering the entire country’s 27 governorates, including the 3 governorates that
are not covered by the company’s direct distribution network.
The company has been a bit reluctant with expanding its sales to key accounts in the last several years, mainly
due to 2 main reasons; key accounts usually purchase goods on credit terms which the company does not
prefer and that key accounts usually require a higher discount than that is required by either wholesalers or
retailers. Even though the white cheese sales to key accounts represent only around 6% of the total white cheese market
and the company perceives that doing business with such accounts as riskier, the company has begun expanding its business
with key accounts in order to gain further exposure, however, the management will be very cautious with this business (little
credit limits per key account) in the short/medium term.
70%
60%
66% 71%
27%
37% 29%
26%
3% 3% 5% 3%
0%
20%
40%
60%
80%
100%
2013 2014 2015 9M2016
Wholesalers Retailers Key Accounts
Sales Channel Overview Average Discount
Wholesalers
Wholesalers, representing the company's indirect
sales, purchase the products from Obour Land's
production facility and sell them to smaller groceries
and supermarkets.
5%
Retailers
Retailers represent the sales carried out by the
company's sales representatives who distribute the
products through the company's branches spread
across Egypt.
2%
Key Accounts
Key accounts represent the chains and hypermarkets
and make up the smallest contribution of the
company's sales as it implements a strict policy to
control products' pricing and to sell on a cash basis.
10%
The company relies heavily on sales to small retail shops, including indirect
sales through the company’s wholesalers and retailers, which accounted for
c97% of the total sales for the nine months ended September 30th
, 2016,
rather than sales to large, key accounts.
It is worthy to note that the management’s preference for the cash basis,
rather than the credit basis has been quiet apparent in the market shares
by sales channels; Obour Land has the largest market share in the small
grocery shops (which mainly depend on cash basis and require less
discounts), with a share of 49%, followed by Domty with a share of 37%.
Moreover, for the large grocery shops (which requires a mix of cash and
credit terms and require somehow relatively larger discounts) Domty has
the largest market share of 49%, reflecting Domty’s acceptance of more
relaxed payment terms, followed by Obour Land’s market share of 30%.
Additionally, as for the supermarkets / key accounts (which mainly
depend on credit basis and require the largest discounts), Domty has by far
the largest market share of around 60% and Obour Land lags far behind
with a quiet small share of 11%, reflecting the company’s reluctance with
doing business with key accounts.
Small
Grocery
Shops , 54%
Large
Grocery
Shops , 40%
Super
Markets /
Key
Accounts ,
6%

21
JANUARY, 2017
OBOUR LAND WEIGHTED HANDLING AVERAGE EVOLUTION (%)
NUMERIC AND WEIGHTED HANDLING (%) – 9M2016 – BY BRAND
ACCOUNTS RECEIVABLES – EGP MN. RECEIVABLES DAYS ON HANDS - DOH
SOURCE: OBOUR LAND
As for the presence of the company’s products, the company has a good position relative to its competitors. During the
9M2016, the company had a numeric distribution and weighted distribution of 65% and 90% respectively. Since the company
relies mainly on sales to small retail shops and groceries, it is able to complete substantially all of its sales in cash, rather than
on credit. Executing most of the company’s operations on cash basis, rather than on credit basis has a positive effect on the
company’s balance sheet i.e. accounts receivables and on the company’s cash conversion cycle.
65%
27%
22%
11% 10%
4% 3% 0%
90%
69%
49%
17%
31%
14%
5% 8%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Obour Land Domty Domty Plus Greenland Gebnety President Panda Damo
Numeric Handling Weighted Handling
59%
36%
79%
53%
85%
62%
81%
55%
81%
73%
80%
77%
93%
62%
85%
80%
94%
86%
96%
72%
89% 87% 90%
90%
0%
20%
40%
60%
80%
100%
120%
Cairo Alexandria Delta Upper Egypt Canal Zone Egypt
2013 2014 2015 7M2016
4 7 13 11
77 89
72 8582
99
83
125
145
197
243
356
0
50
100
150
200
250
300
350
400
2013 2014 2015 9M2016
Obour Land Arab Dairy Juhayna Domty
3 3 4 3
43
52
49
55
9 10
7 9
63 64 63
79
0
10
20
30
40
50
60
70
80
90
2013 2014 2015 9M2016
Obour Land Arab Dairy Juhayna Domty

22
JANUARY, 2017
# OF TRUCKS & VANS MAXIMUM HANDLING CAPACITY (TONS/DAY)
SOURCE: OBOUR LAND
The company owns a fleet of 201 distribution vehicles, which is comprised of a mix of refrigerated cars, small trucks and large
tractor trailers. During 2013-2016, the company’s fleet has grown from 161 vehicles to 201 vehicles, representing a growth of
25%. Moreover, the maximum handling capacity has also grown from 479 tons per day in 2013 to 605 tons per day by
September 30th
, 2016, achieving a growth of 26% over the same period. One of the company’s main focus points in the near
term is expanding its distribution network; the company plans to add 60 new trucks in 2017, where 40 trucks would
be used for the distribution of the milk and juice products and the remaining 20 trucks would be used for the
distribution of the mozzarella and the spreadable cheese products.
161
191
201 201
0
50
100
150
200
250
2013 2014 2015 9M2016
479
555
605 605
0
100
200
300
400
500
600
700
2013 2014 2015 9M2016

23
JANUARY, 2017
OBOUR LAND – GROSS SALES EVOLUTION
OBOUR LAND – REVENUES DOMTY – REVENUES
REVENUE CONTRIBUTION BY SKU
SOURCE: OBOUR LAND
Financial Analysis:
Revenues:
Since the company’s inception, it has always had a strong and consistent revenue growth, supported by the addition of
production lines. During the company’s first year of operations, 1999, it was able to achieve gross sales of EGP 763k, where
the company achieved gross sales of EGP 1,175mn during 2015. Between 2007, when the company first introduced its carton
pack cheese products and 2015, the company’s gross sales increased by a CAGR of 54.1%. Over the period of 2011-2015, the
company achieved gross sales CAGR of 54.9%. During the 9M2016, the company achieved net sales of 1,054.3mn, showing a
growth of 24.6% compared to the same period a year earlier and according to the management’s guidelines, the company
achieved sales of EGP 1,450mn during 2016, achieving a growth of 24%. It is worthy to note that Obour Land’s revenues from
white cheese (carton pack and plastic tub) has surpassed that of its main competitor, Domty, since 2014 and Obour Land’s
revenues grew at a much faster rate than that of Domty during 2013-2015 where they both showed a CAGR of 49% and 21%
respectively.
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Gross Sales
(EGP Mn.) 1 4 6 7 10 13 16 31 37 29 56 89 204 359 532 932 1,175
529
927
1,170
1,054
0
200
400
600
800
1,000
1,200
1,400
2013 2014 2015 9M2016
731
880
1,067 981
111
249
333
259
0
200
400
600
800
1,000
1,200
1,400
1,600
2013 2014 2015 9M2016
White Cheese
Others (Mozzarella, Spreadable, Juice)
2013-2015 CAGR: 49% 2013-2015 CAGR: 21%
842
1,129
1,400
1,240
250gm Carton
Pack, 52.40%
500gm Carton
Pack, 27.30%
125gm Carton
Pack, 14.50%
80gm Carton
Pack, 0.60%
Plastic Tub,
5.20%
The company currently produces two types of cheese;
plastic tub cheese and carton pack cheese. The carton pack
is the company’s main product, where it contributed c94.8%
to revenues during the 9M2016, where the plastic tub
contributed a minimal 5.2% to sales during the same
period.

24
JANUARY, 2017
SALES BREAKDOWN BY CHANNELSALES BREAKDOWN BY GEOGRAPHICAL DISTRIBUTION
SOURCE: OBOUR LAND
WHITE CHEESE CARTON PACK RETAIL PRICES –JULY 2016 (EGP / KG)SALES BREAKDOWN – QUANTITIES SOLD & AVERAGE PRICES
SOURCE: OBOUR LAND
The two regions of Delta and Upper Egypt are considered the top regions in terms of sales, where they represented 57% and
18% during the 9M2016 and 9M2015 respectively. The company usually sells its products through wholesalers, where they
accounted for 71% and 66% of sales during 9M2016 and 2015. The company minimizes sales through chains and hyper
markets, as they typically require high discount and flexible credit terms.
Pricing
Obour Land offers its products at a premium to the market average, reflecting the company’s premium quality products. The
company’s products include a higher percentage of protein and the company prefers to use natural butter and oils over
shortening to ensure superior taste and quality. The plastic tub cheese is usually sold at higher prices than the carton pack
cheese. It is also important to note that the company usually prices the smaller SKUs higher than the large SKUs, in order to
entice the consumers to purchase the larger SKUs.
Greater Cairo
- EGP
177.7mn, 17%
Delta - EGP
606.7mn, 57%
Upper Egypt
- EGP
195.6mn, 18%
Sinai - EGP
6.1mn, 1%
Alexandria -
EGP 33mn, 3%
Canal Zone -
EGP 39.5mn,
4%
Exports - EGP
1.4mn, 0.1%
70%
60% 66% 71%
27%
37% 29% 26%
3% 3% 5% 3%
0%
20%
40%
60%
80%
100%
2013 2014 2015 9M2016
Wholesalers Retailers Key Accounts
16.68
16 15.99 15.99
14.93
14
14.5
15
15.5
16
16.5
17
Obour Land Groupe
Lactalis -
Teama
Americana -
Greenland
Domty Arab Dairy -
Panda
2013 2014 2015 9M2015 9M2016
Carton Pack Cheese
Quantity Sold (Tons) 38,066 62,158 83,356 59,767 71,100
Average Price (EGP/KG) 13.5 13.9 13.3 13.3 14.1
Plastic Tub Cheese
Quantity Sold (Tons) 890 3,587 3,386 3,282 3,152
Average Price (EGP/KG) 20 19.4 20.6 16 17.9

25
JANUARY, 2017
SOURCE: OBOUR LAND
PRICE HIKES PER SKU - 2016
COGS BREAKDOWN – EGP MN. % OF SALES
During the 9M2016, the company’s sales increased by 24.6%, as it stood at EGP 1,054.3mn. The growth in sales was primarily
attributable to an increase in the volume of carton pack cheese sold in each of the 250 gm, 500gm and 125gm package sizes
in addition to the full nine months of production of the 80gm package size compared to only a single month of production in
the same period a year earlier. Such an increase in the carton pack sales was partially offset by a decrease in the volumes
sold of plastic tub cheese. Also the rise in revenues was attributed to a change in prices; beginning 2016, the company
gradually started increasing its prices, as a trial to pass to pass a portion of the increase in raw materials’ prices to consumers.
The company implemented five price hikes during the 9M2016 and additional two price hikes during 4Q2016.
COGS:
The raw materials costs represent the largest portion of the company’s COGS, where it represented 62% and 70% of sales
during 9M2016 and 2015 respectively. The company imports c70% of its required raw materials and the remaining portion is
locally sourced. Skimmed milk powder (SMP) and Milk protein concentrate (MPC) are the company’s main raw materials
where they represented 47.9% and 51.3% of the raw materials during 9M2016 and 2015 respectively. During 2014, the
global prices of most commodities, including SMP and MPC, rose significantly, which affected the company’s margins.
Meanwhile, during 2015, the prices of SMP and MPC, in addition to other major commodities, started to decline, which was
mainly caused by the excessive supply and the abolishment of the EU milk quotas. The packaging materials constitute the
second-largest category in COGS after the raw materials, where it represented 16% and 18% of COGS during the 9M2016 and
2015 respectively. Most of the packaging materials are imported and the paper for the carton pack cheese products are solely
sourced from Tetra Pak. The direct industrial expenses are quiet small, as they represented 5% and 2% of sales during the
9M2016 and 2015 respectively. The company is neither an intensive energy user nor a labor intensive business, thus the
effect of the recent hike in energy prices and minimum wage laws were not very significant.
Carton Pack (EGP/KG) 1/Mar/16 1/Apr/16 1/May/16 1/Jul/16 1/Aug/16 1/Oct/16 1/Nov/16
500 Grams 13.75 14.08 14.75 15.41 16.08 16.75 19.25
250 Grams 14.00 14.30 14.88 15.63 16.37 16.81 19.30
125 Grams 15.10 15.50 16.00 16.80 17.60 18.00 20.18
2013 2014 2015 9M2015 9M2016
EGP Mn. % of Sales EGP Mn. % of Sales EGP Mn. % of Sales EGP Mn. % of Sales EGP Mn. % of Sales
Raw Materials 385 73% 715 77% 814 70% 605 72% 652 62%
Industrial Expenses 14 3% 19 2% 23 2% 15 2% 52 5%
Change in Inventory -1 0% -5 -1% -2 0% 0 0% -6 -1%
Packaging 86 16% 122 13% 176 15% 116 14% 132 13%
Discounts -17 -3% -17 -2% -27 -2% -24 -3% -7 -1%
Others 1 3% 0 0% 0 0% 1 0% 4 0%
Total 467 836 985 715 827

26
JANUARY, 2017
RAW MATERIALS BREAKDOWN – EGP MN. % OF SALES
SOURCE: OBOUR LAND
OBOUR LAND - GROSS PROFIT ( EGP MN.) & GROSS PROFIT MARGIN (%)
SOURCE: OBOUR LAND
SOURCE: DOMTY
DOMTY - GROSS PROFIT (EGP MN.) & GROSS PROFIT MARGIN (%)
Gross Profit and Gross Profit Margin:
2013 2014 2015 9M2015 9M2016
EGP Mn. % of Sales EGP Mn. % of Sales EGP Mn. % of Sales EGP Mn. % of Sales EGP Mn. % of Sales
SMP & MPC 205 39% 397 43% 417 36% 306 36% 312 30%
Butter 50 9% 80 9% 110 9% 77 9% 124 12%
Oils 66 13% 101 11% 173 15% 123 15% 119 11%
GDL 16 3% 30 3% 29 2% 22 3% 26 2%
Others 48 9% 107 12% 85 7% 77 9% 71 7%
Total 385 715 813 605 652
During the 9M2016, the company achieved a gross profit of EGP
227mn, growing by 73.2%, compared to EGP 131mn during the
same period a year earlier. The company’s gross profit margin was
21.5% and 15.5% during the 9M2016 and 2015 respectively.
According to the management’s guidelines, during 2016, the
company achieved a gross profit of EGP 342mn, versus EGP 178mn
during 2015, growing by an outstanding 92%. The company’s GPM
for 2016 stood at 23.6%, where it stood at 15.25% during 2015. It
is worthy to note that the GPM for 4Q2016 stood at 31%, which
shows the company’s superior inventory management of raw
materials, coupled with suitable price increases among its different
products.
According to the company’s management, the company has huge
amounts of inventory that was purchased at very favorable prices,
where even if the company does not raise any of its prices, it
would be able to achieve a GPM of 22% during the first 4-5
months of 2017. Usually the company keeps stockpiles of inventory
enough for 3 months of production, however when the prices were
favorable the company increased its stockpiles up to 4-5 months.
The company intends to decrease its stockpiles back to the 3
months levels when the EGP-USD rate stabilizes.
Even though Obour Land sells its products at higher prices
than its main competitor, Domty, it is worthy to note that
it has a lower GPM. This is due to Obour Land’s keenness
on using raw materials of higher quality and higher protein
content.
As for the new segments, the company plans to achieve GPM that
are somehow higher than that of the cheese products. The
company targets GPM levels for the mozzarella cheese,
spreadable cheese, milk and juice of 36-37%, 35-36%,
20% and 17% respectively.
198.8
240.5
366.4
270.1 273.9
0
50
100
150
200
250
300
350
400
2013 2014 2015 9M2015 9M2016
Gross Profit (EGP Mn.) Gross Profit Margin (%)
23.6%
21.3%
26.2%
25.8% 22.1%
61
91
185
131
227
0
50
100
150
200
250
2013 2014 2015 9M2015 9M2016
Gross Profit - EGP Mn. Gross Profit Margin (%)
11.6%
9.9%
15.8%
15.50%
21.5%

27
JANUARY, 2017
SALES & MARKETING EXPENSES (EGP MN. & % OF REVENUES)
SOURCE: OBOUR LAND
Sales, General and Administrative Expenses:
- Sales & Marketing Expenses:
In the past, the company’s well known brand has enabled the company to adopt a relatively efficient approach to media
communications and spending. The company mainly focuses on the more expensive “above-the-line” media campaigns. For
the 2015 – 2016 football season, the company was the sponsor of the Al Zamalek Football Club. Also in 2016, the company
became the premier sponsor of the Egyptian Football Cup and it sponsored the Egyptian Premier League as well. Also during
2016, the company intensified its outdoor advertising, in addition to launching an advertising campaign during the Holy month
of Ramadan.
During the 3 years between 2013 and 2015, sales and marketing expenses as a percentage of sales had an average of 3.5%.
During the 9M2016, sales and marketing expenses grew by 93.3% y-o-y, reaching EGP 71.1mn, where it stood at EGP 36.8mn
in 9M2015. During the 9M2016, sales and marketing expenses averaged 6.5% of sales, which is considered quiet higher than
that of the previous years. The rise in such expenses in 2016 was mainly due to the new branding of the
company’s products, in addition to the expenses of the IPO that took place during late 2016. The company’s
management believes that the marketing expenses in the coming period would mainly focus on the new products and the new
segments. According to the company’s management, the sales and marketing expenses would have an average of 5.5-6% of
sales in the coming years.
- General & Administrative Expenses:
During the 9M2016, the company’s general and administrative expenses grew by 57.7%, reaching EGP 4.9mn, compared to
EGP 3.1mn during the 9M2015. The huge increase was mainly due to the increased utility costs, where the government
increased the utility costs in mid-2016. In addition to the increased utility costs, G&A expenses increased due to the rise in
salaries expenses, due to the increase in the number of employees and the increase in the salaries paid to new and existing
employees. It is worthy to note that the G&A expenses represent a very minimal rate of sales, where it had an average of
0.5% during the last years. As a response to the inflationary pressures that occurred post the EGP-floatation, the
company raised the salaries and wages of its employees and workers by 15% in November and the
management expects to raise the salaries and wages for another time by the end of January by 10%
5.9 4.9
27.6
21.1
48
8.2 13.9
8.4
5.9
3.8
3.4
5
7.8
5.5
12.6
2.4
2.9
2.9
4.2
4.5
3.7%
2.9%
4.0%
4.1%
6.5%
0
10
20
30
40
50
60
70
80
2013 2014 2015 9M2015 9M2016
Advertising & Marketing Expenses Salaries & Wages Other S&M #REF! Sales & Marketing / Revenues (%)

28
JANUARY, 2017
SOURCE: OBOUR LAND
GENERAL & ADMINISTRATIVE EXPENSES (EGP MN. & % OF REVENUES)
Working Capital and Cash Conversion Cycle:
The company’s management is considered very efficient with regards to its working capital, resulting in a one of the shortest
cash conversion cycles in the sector. The company relies on a multiple of sources of funding in addition to cash, so it can
optimize its cash flows, including bank debt, shareholder loans, accounts and notes payables and supplier funding.
As previously mentioned, the management prefers cash sales, rather than credit sales and consequently the company has
much lower receivables; either in absolute terms or days on hand, than its competitors. Usually the management also prefers
to pay its suppliers in cash or as early as possible, in order to obtain more favorable discounts, leading to lower-than-
competitors’ suppliers and notes payables; either in absolute terms or days on hand.
In 2015, the company adopted a strategy for its inventory management, where the company would increase
purchases and pile up inventories of raw materials opportunistically when prices are relatively lower and use
the stockpiled inventory when the prices are relatively higher. This strategy has been implemented in 2015; when the
global commodity prices fell to relatively low rates, the company took a shareholder loan of EGP 95mn, in order to take
advantage of the low raw material prices and stockpile inventory, in addition to acquire two land plots adjacent to the
company’s production facility. During 2016, the company foresaw the deterioration of the local currency and took advantage
the low global commodity prices and kept piling up even more inventory of raw materials. This new strategy has led to the
rise of the inventory and the inventory days on hand.
It is worthy to note that the company intends to maintain this inventory management strategy in 2017, as the
company currently has inventory of raw materials that is sufficient for production for 4-5 months, which is
higher than the company’s average of 3 months. The management has made it clear that once the EGP-USD
rate stabilizes, the company would reduce its inventory levels to its historic levels of 3 months.
1.4
2.4 2.5
1.5
1.9
1.5
1.6
2.2
1.5
2.8
0.6%
0.4%
0.4%
0.4%
0.5%
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
2013 2014 2015 9M2015 9M2016
Other G&A Salaries & Wages G&A / Revenues (%)

29
JANUARY, 2017
SUPPLIERS AND NOTES PAYABLES, SUPPLIERS AND NOTES PAYABLES DOH (EGP MN., DAYS) CREDITORS AND ACCRUED EXPENSES, CREDITORS AND ACCRUED EXPENSES DOH
(EGP MN., DAYS)
ADVANCE TO SUPPLIERS, ADVANCE TO SUPPLIERS DOH (EGP MN., DAYS) PREPAID EXPENSES, PRE-PAID EXPENSES DOH (EGP MN., DAYS)
INVENTORY, INVENTORY DOH (EGP MN., DAYS) RECEIVABLES, RECEIVABLES DOH (EGP MN., DAYS)
59
33
95
216
11
12
17
11
4
9
11
17
0
2
9
6
0
50
100
150
200
250
300
2013 2014 2015 9M2016
Raw Materials GIT Finished Goods Spare Parts Days on Hand DoH (Days)
49
83
4
7
13
11
0
2
4
6
8
10
12
14
2013 2014 2015 9M2016
Receivables (EGP Mn.) Days on Hand DoH (Days)
3
12
4
13
21
0
5
10
15
20
25
2013 2014 2015 9M2016
Advance to Suppliers Days on Hand DoH (Days)
3
7
12
40
0
5
10
15
20
25
30
35
40
45
2013 2014 2015 9M2016
Pre-Paid Expenses (EGP Mn.) Days on Hand DoH (Days)
2
3
4
13
45
43
18
101
0
20
40
60
80
100
120
2013 2014 2015 9M2016
Suppliers & Notes Payable (EGP Mn.) Days on Hand DoH (Days)
35
19
7
33
2
1 1
5
0
1
2
3
4
5
6
2013 2014 2015 9M2016
Creditors and Accrued Expenses (EGP Mn.) Days on Hand DoH (Days)
2
0 0
1
58
24
3
4
3
9
2
5
7

30
JANUARY, 2017
CASH CONVERSION CYCLE - DAYS
SOURCE: OBOUR LAND
2013 CAPEX BREAKDOWN (EGP MN) 2014 CAPEX BREAKDOWN (EGP MN)
2015 CAPEX BREAKDOWN (EGP MN) 9M2016 CAPEX BREAKDOWN (EGP MN)
CAPEX:
In the past, the company’s CAPEX has mainly focused on the expansion of the production facility, the maintenance of the
production facility (maintenance CAPEX) and the purchasing of new machines, equipment and vehicles. The CAPEX for the
9M2016 stood at EGP 48.4mn and according to management’s guidelines the total CAPEX for 2016 would stand at EGP
142mn. The CAPEX for 2016 was mainly related to the expansion of the production facility to include the new production lines
of cheese, juice and milk. The company does not expect that the CAPEX for 2017 would be significant, as the majority of the
expansion costs for the production facility expansion were pre-paid in 2016.
36
13
55
71
0
20
40
60
80
2013 2014 2015 9M2016
12.2
1.3 0.6
23.3
37.4
0
5
10
15
20
25
30
35
40
Land Vehicles Others Additions in
PUC
Total CAPEX
0.6 0.4 0.2
38.8 40
0
5
10
15
20
25
30
35
40
45
Machinery &
Equipment
Vehicles Others Additions in
PUC
Total CAPEX
1.6 0.1 0
86 87.6
0
10
20
30
40
50
60
70
80
90
100
Machinery &
Equipment
Devices &
Utilities
Others Additions in
PUC
Total CAPEX
0.5 0.1 0.3
82.8 83.6
0
10
20
30
40
50
60
70
80
90
Machinery &
Equipment
Devices &
Utilities
Others Additions in
PUC
Total CAPEX

31
JANUARY, 2017
TOTAL CAPEX TO SALES (%)
SOURCE: OBOUR LAND
OBOUR LAND - NET PROFIT (EGP MN.) & NET PROFIT MARGIN (%)
SOURCE: OBOUR LAND
SOURCE: OBOUR LAND
DOMTY – NET PROFIT ( EGP MN.) & NET PROFIT MARGIN (%)
SOURCE: DOMTY
Net Profit and Net Profit Margin:
7%
4%
7%
8%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
2013 2014 2015 9M2016
19
32
92
68.2
110.1
0
20
40
60
80
100
120
2013 2014 2015 9M2015 9M2016
4%
3%
8%
8%
10%
The company achieved net profits of EGP 110.1mn during the 9M2016,
growing by 61% when compared to the net profits of the 9M2015, which
stood at EGP 68.2 million. The company’s net profit margin was 10.4% and
8.1% in the 9M2016 and 2015 respectively. Even though the Obour Land’s
GPM was lower than that of Domty, Obour Land was able to achieve a
higher NPM than Domty during the 9M2016.
51.1
28.3
128.7
97.4
54.9
0
20
40
60
80
100
120
140
2013 2014 2015 9M2015 9M2016
6.10%
2.50%
9.20%
9.30%
4.40%

32
JANUARY, 2017
Possible Future Initiatives for Obour Land:
- Exports:
Obour Land has been one of the companies with very minimal exports during the last several years, where exports usually
represent less than 1% of the company’s total gross sales. The minimal cheese exports have been mainly due to 3 reasons;
1. Dairy products (including white cheese) are very difficult to export, as most of the countries may either have their own
dairy farms or import powder milk and they would produce the dairy products in their own countries, 2. The agreements that
were offered to Obour Land from Russian companies in the past were not what the company was looking for; as the Russian
companies wanted only short-term agreements for just a couple of years just to fill the supply shortages resulting from the
foreign sanctions against Russia, 3. Export sales are usually made through agents and agents usually require very flexible
credit terms and huge discounts.
The company has mentioned that it may start to export some of its juice products. The company would begin exporting its
juice products mainly to African countries. The cheap prices of fruits and fruits’ concentrates (and hence higher margins) have
enticed the management to the idea of exporting such products.
The management has made it clear that it may reconsider exporting cheese products in the coming period, yet the agreement
terms must be appropriate for the company’s strategy to build long-lasting relations and not just temporary agreements.
- Mergers and Acquisitions:
We believe that the entire Food & Beverage sector in Egypt would witness extensive M&A activities in the current and the
coming few years. This is mainly due to the smaller producers not being able to keep up with the rise in costs. We
believe that the cheese industry is of no exception, and we expect that some M&A - mainly acquisitions – would take place in
the cheese industry. From our perspective, large-scale producers would benefit from acquiring small-scale producers by
acquiring their market share and expanding their target market as usually the small-scale producers would either target niche
markets or consumers from different income levels. Moreover, regional and foreign producers may consider penetrating the
Egyptian F&B sector, especially in the staple foods, in order to benefit from the strong demand and the relatively cheap
currency.
- Backward Integration:
During the last several years, some of the large companies in the F&B sector gained a competitive edge over their
competitors, through backward and forward integration. The importance of backward integration has been heightened in 2016
where most, if not all, prices of raw materials have hiked significantly. We believe that Obour Land may invest in the
coming period in backward integration through either a dairy farm for its cheese and milk businesses or
through a fruits farm for its juice business.

33
JANUARY, 2017
Financial Statements … Historical & Forecast
Income Statement Brief Hist. Forecast
In EGP Mn 2015 2016F 2017F 2018F
Revenues
1,170 1,546 2,373 3,034
Change
26% 32% 54% 28%
COGS
985 1,165 1,875 2,461
Change
18% 18% 61% 31%
Gross Profit
184.8 380.2 497.7 572.4
Depreciation & Amortization
10 10.9 20.6 26.6
EBITDA
130 267.6 349.6 383.7
Net Income
91.85 129.3 242.7 255.9
Net Attributable Income
91.85 122.8 230.5 243.1
Balance Sheet Brief Hist. Forecast
In EGP Mn 2015 2016F 2017F 2018F
Cash
125.6 58.8 117.7 64.2
Net Receivables
13.1 22.4 35.96 47.2
Net Inventory
131.3 149.6 213.95 280.8
Other Current Assets
29.7 35.2 55.1 71.3
Total Current Assets
299.69 265.95 422.7 463.5
Net PPE
182.5 303.99 387 490.5
Other LT-Assets
34.87 26.15 17.4 8.72
Total Long Term Assets
217.4 330.1 404.5 499.2
Total Assets
517.1 596.4 827.8 963.6
Liabilities
Credit Facilities & CPLTD
144.8 109.7 134.3 112.2
Accounts Payable
17.98 21.3 34.2 44.9
Total Current Liabilities
195.3 146.95 194.2 190.89
Total Long Term Liabilities
38.6 36.99 49.56 66.25
Total Liabilities
233.9 183.9 243.75 257.1
Equity
Paid-in-Capital
200 200 200 200
Reserves
3.1 6.3 4.4 13.03

34
JANUARY, 2017
SOURCE: OBOUR LAND & PRIME ESTIMATES
RE
80.1 212.7 379.6 493.4
Total Equity
283.2 412.5 584 706.4
Financial Ratios Hist. Forecast
2015 2016F 2017F 2018F
Gross Profit Margin – GPM
16% 25% 21% 19%
EBITDA Margin
11% 17% 15% 13%
Net Profit Margin - NPM
8% 8% 10% 8%
EPS
0.46 0.65 1.21 1.28
DPS
0.32 0.61 0.77
P/E
19.60 13.92 7.42 7.03
EV/EBITDA
14.8 7.5 5.9 5.6
ROA
22.27% 22.06% 32.37% 27.14%
ROE
38.32% 32.34% 42.64% 34.62%
Debt / Equity Ratio
Total Assets Turnover
54.85% 26.6% 22.99% 15.89%
2.84 2.78 3.33 3.39

35
JANUARY, 2017
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

36
JANUARY, 2017
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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