Pakistan Research
Sustainable Long Term Growth Prospects: EFOODS presents considerable long term growth prospects based on 1) rapid expansion into non cyclical high growth markets 2) triumphant penetration and market growth in key segments of operation and 3) successful establishment of high value brands. We project earnings to grow at a CAGR of 49% and revenue growth at a CAGR of 21% for the next five years, making EFOODS one of the best consumer plays in the Pakistani market Massive Untapped Potential: The companys advantage stems from its dominant position in high growth non cyclical UHT milk market, which has shown double digit market growth in last five years and still represents a minute 4% portion of total tradable milk in Pakistan, presenting massive untapped potential going forward. EFOODS has successfully tapped a diverse range of income groups with its innovative product offerings and marketing, creating unmatched brand equity for its entire dairy portfolio. Aggressive Expansion to Fuel Growth: EFOODS has ambitious expansion plans for the coming years, with the company having already announced a PKR8.7bn capex for CY12. We believe aggressive spending to build capacity and expanding distribution network will continue going forward, making EFOODS a Hundred Billion Turnover company within the next ten years Attractive Valuations: Our multiple valuation approaches of Discounted Cash Flows and comparison of relative multiples with local and regional FMCG players lead to our Dec12 Target Price of PKR57/sh for the company, presenting a 19% upside from current levels .