Edita Food: Powerful Brands and Durability in Developing World

Fred Steiner of BCCM Advisors presented his investment thesis on Egypt-based Edita Food Industries (UK: EFID) at Best Ideas 2023.

Thesis summary:

Since the GFC, Egypt has experienced a series of major events, including the 2011 Egyptian Revolution, a change in government and the constitution in 2013, a 50% devaluation in its currency against the US dollar in 2016, Covid-19 and its impact on tourism, the fallout of the Ukraine War due to its dependence on wheat imports and Ukrainian and Russian tourists, and finally, over the past nine months the currency has depreciated a further 50%.

US dollar investors have lost two-thirds of their capital since the 2015 IPO of snack regional market leader Edita Food Industries (EFID.CA on the EGX and EFID.L on the LSE). Over this tumultuous period, Edita has improved the breadth and depth of its portfolio of brands, grown exports to 17 countries, learned from pricing mistakes, and recently established a manufacturing presence in Morocco.

Growth has kept up with the dollar appreciation, translating into a 60-75% contraction in trading multiples. Fred believes Edita offers investors one of the best examples of the power of brands and durability in the developing world.

Edita is valued at 2023 ~7x EV/EBITDA and ~11x P/E while being a consistent generator of high-teens to low-twenties ROIC.

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About the instructor:

As Portfolio Manager of the Blue Clay Pan-Africa Fund, Fred Steiner is responsible for research, security selection and portfolio construction. Prior to re-joining BCCM Advisors, Fred earned an MBA from the University of Minnesota’s Carlson School of Management where he graduated with distinction and was a Curtis L Carlson Scholarship recipient. During the full- time business school program, Fred worked with a multi-family office, Sawmill Management as a Senior Analyst. Prior to business school, Fred served as an Analyst and Associate at BCCM and worked in various roles at Signature Financial Partners. Fred studied at University of Cape Town in 2008, graduated from Union College in 2009 with a Bachelor’s degree in Economics and Minor in History and is a CFA charterholder. Fred is a Board of Trustees member of African Wildlife Foundation and previously volunteered for Soccer 4 Hope while living in Cape Town, South Africa in 2010.

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