Taaleem Management Services (Taaleem)

IPO Note A Rising Player in a Promising Sector

Wednesday, 31 March 2021
We value Taaleem (TALM.CA) in the range of EGP 5.58 - 6.59 per Issuer Details
share, giving it a total market capitalization of EGP 4,076 – Issuer Taaleem Management Services
4,813mn. We view the IPO price of EGP 5.75 as reasonable, but Bloomberg / Reuters Ticker TALM EY EQUITY / TALM.CA
offers a limited upside potential of 15% from our high-end Country / Sector Egypt / Education
valuation scenario and implies a 2020 P/E of 30x which is slightly
Listing Exchange / Currency EGX / EGP
higher than CIRA's 2020 P/E of 28x.
Fiscal Year Starts 1 Sep and ends 31 Aug
The company's story is intact, being the owner and operator of Authorized Capital EGP 2.0bn
the largest private university in Upper Egypt, Nahda University Par Value EGP 1/share
(NUB), enjoying robust revenue growth with margins Shares Outstanding 730,250,000 shares
Paid-in Capital EGP 730mn
improvement and a strong cash position. Further, TALM operates Mortgaged Shares None
in an underserved sector with high barriers to entry.
Secondary Offering Details
Tuition fees and utilization rates are key drivers for TALM’s Offering Size Up to 357,822,200 shares (49% of outstanding)
value, and we see the company possesses the ability to increase Selling Shareholders Sphinx Obelisk B.V.
them both in the future. 17,819,110 shares / 339,931,090 shares
Ret. Vs. Inst. Split (Share)
(Ret. / Inst.)
Badya University is promising and could be an upside risk to our Ret. Vs. Inst. Split (Value) EGP 102mn / EGP 1.9bn (Ret. / Inst.)
valuation. That being said, we didn’t account for it in our valuation Ret. Vs. Inst. Split (%) 5% / 95% (Ret. / Inst.)
as we believe any value it will add to TALM will only be reflected in
Ret. Vs. Inst. Subscrip Dates 28 Mar - 1 Apr / 14 Mar - 26 Mar (Ret. / Inst.)
the very long term.
Indicative Price Range EGP 5.48 - 6.02 / share
Offering Price Ann. Date 28 March 2021
Shareholding Structure Final Offering Price EGP 5.75 / share
Pre-IPO Instit. Tranche Coverage 2.34x
0.01% Day 1 Trading 7 April 2021
Stabilization Fund Size 100% coverage of retail tranche
Stabiliz. Fund Eligibility Shareholders who subscribed in the retail tranche
Post-IPO lock-up 2 years for 51% of Sphinx's remaining stake

Fair Value Study Details

99.99% Issued-by BDO Khaled & Co.
Valuation Date 30 November 2020
Sphinx Obelisk Others Valuation Methods DCF and Multiples (70:30 weighted)
Equity Fair Value EGP 4.5bn
Post-IPO Fair Value / Share EGP 6.20
0.01%

Offering Syndicate
Coordinator & Bookrunner CI Capital Investment Banking
49.00%
51.00% Legal Advisor Matouk Bassiouny & Hennawy
Fin. Stat. Auditor PricewaterhouseCoopers
Indep. Financial Advisor BDO Khaled & Co.
Source: Company disclosure, Sigma Research
Sphinx Obelisk Free Float Others

Source: Company disclosure, Sigma Research

Offering Timeline
Mar 26 Apr 1
Inst. Subscrip. Retail
Close Subscrip.
Close

Mar 14 Mar 28 Apr 7

Inst. Price Day 1
Subscrip. Announce. Trading
Open and
Retail Mohamed Sobol
Subscrip. Mohamed.sobol@sigma-capital.com
Open
Source: Company disclosure, Sigma Research

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 Taaleem Management Services (Taaleem)
IPO Note| Education| Egypt Wednesday, 31 March 2021

Table of Contents

I. Valuation & Risks Page 3

II. TALM vs CIRA Page 5
III. Investment Thesis Page 6
IV. Company Profile Page 9
V. Financials Statements Page 10

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 Taaleem Management Services (Taaleem)
IPO Note| Education | Egypt Wednesday, 31 March 2021

Valuation

In an attempt to reach a guideline for TALM’s fair value, we conducted 2 valuation scenarios; with the
main underlying difference being our assumptions regarding revenues (and by extension COGS and net
profit). We utilized the DCF valuation method in both scenarios, with a terminal growth rate of 7%, and an
adjusted beta of 0.75. However, different discount rates were assumed regarding terminal WACC in each
scenario. It is important to note that we excluded Badya University from our valuation as we believe any
value it will add to TALM will only be reflected in the very long term.

Higher-end Scenario

In the higher-end scenario we value TALM at EGP 6.59/share. This scenario assumes TALM’s Nahda
University (NUB)’s revenues will grow at a 5-year CAGR of 24%, and charge an average tuition fee of EGP
120k in the final year of our forecast horizon (2025), with a utilization rate of 75%. Our tuition fees
assumption is based on the average fees of different universities in Egypt for reference, while the 75%
utilization rate was based on NUB’s historical average utilization rate of 77%, which we believe will be
maintained going forward. We also assumed the Pupil To Teacher ratio (PTR) will be in line with NUB's
historical average of 11.75x. Higher capacities and the expected increase in averages tuition fees will lead to
a higher GPM from the current 65% to 71% by 2025.

This scenario’s Fair Value (FV) of EGP 6.59/share offers a limited upside potential of 14% from the IPO final
offering price of EGP 5.75/share, and implies a P/E of 25x in 2021, which will normalize to 10x by 2025.

Summary of DCF valuation

In EGPmn, otherwise stated 2021f 2022f 2023f 2024f 2025f

NOPAT 181 240 308 386 472

Depreciation & amortization 57 61 69 74 82
Change in working capital 91 79 93 107 121
CapEx (114) (144) (135) (165) (133)
Appropriations (19) (25) (32) (39) (48)
FCFF 196 212 302 363 494
PV of FCFF 183 170 212 223 263
Sum of PV of FCFF 1,050
PV of terminal value 3,410
Enterprise value 4,460
TALM’s FV sensitivity to terminal WACC & TGR
Net cash /(debt) (1Q21) 362 Terminal Growth Rate
Minority interest (1Q21) (9)
Terminal WACC

6.59 5% 6% 7% 8% 9%
Others (1Q21) - 13% 6.50 7.18 8.08 9.33 11.16
Equity value 4,813 14% 6.01 6.55 7.23 8.14 9.40
15% 5.61 6.05 6.59 7.28 8.20
No. of Shares (mn) 730 16% 5.28 5.64 6.09 6.63 7.33
FV/share (EGP) 6.59 17% 5.01 5.31 5.68 6.12 6.68

Source: Sigma Research Source: Sigma Research

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 Taaleem Management Services (Taaleem)
IPO Note| Education | Egypt Wednesday, 31 March 2021

Valuation (Cont.’d)

Lower-end Scenario

In the lower-end scenario we value TALM at EGP 5.58/share. This scenario assumes that the company will
be able to grow its revenues at a 5-year CAGR of 18%. In order to reach the terminal year’s average tuition
fees in this scenario, we applied a c13% discount to our bullish scenario’s target fees of EGP 120k (EGP
105k). We also assumed that NUB's utilization rate will reach 65% by 2025, and kept the PTR the same as
that in our bullish scenario. Said assumptions imply that the current GPM of 65% will be maintained over our
forecast horizon.

Our bearish scenario FV of EGP 5.58/share implies a downside of 3% from the IPO final offering price of EGP
5.75/share, and translates to a P/E of 21.6x in 2021, normalizing to 12.3x by 2025. That being said, we view
this scenario as overly pessimistic, and are more inclined to believe that the bullish scenario will materialize.
Summary of DCF valuation
In EGPmn, otherwise stated 2021f 2022f 2023f 2024f 2025f

NOPAT 177 211 230 265 321

Depreciation & amortization 57 61 68 71 76
Change in working capital 89 55 49 66 94
CapEx (112) (133) (112) (129) (103)
Appropriations (19) (22) (24) (27) (33)
FCFF 192 172 211 246 355
PV of FCFF 179 138 149 156 197
Sum of PV of FCFF 819
PV of terminal value 2,904
Enterprise value 3,723
TALM’s FV sensitivity to terminal WACC & TGR
Net cash /(debt) (1Q21) 362 Terminal Growth Rate
Minority interest (1Q21) (9)
Terminal WACC

5.58 5% 6% 7% 8% 9%
Others (1Q21) - 12% 5.51 6.17 7.10 8.45 10.64
13% 5.03 5.54 6.22 7.15 8.52
Equity value 4,076
14% 4.66 5.07 5.58 6.26 7.20
No. of Shares (mn) 730 15% 4.36 4.69 5.10 5.62 6.30
FV/share (EGP) 5.58 16% 4.12 4.39 4.72 5.13 5.66

Source: Sigma Research Source: Sigma Research

Upside Triggers: Downside Risks:

• Higher growth in average tuition fees than expected
• Higher than expected enrollment of new students
• Faster roll-out of Badya University
• Unfavorable regulations that may negatively affect
student intake quota increases
• Unfavorable changes in working capital dynamics
• Lower utilization rate than expected.
• Lower growth in average tuition fees than expected.
• Slower than expected additions of new capacities

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 Taaleem Management Services (Taaleem)
IPO Note| Education | Egypt Wednesday, 31 March 2021

TALM vs CIRA
Where TALM stands relative to CIRA
TALM CIRA
vs
2018 2019 2020 2018 2019 2020
Financial Performance
Revenues (EGPmn) 274 354 450 517 705 1,088
Revenue 2018-20 CAGR 28% 45%
Gross Profit (EGPmn) 164 218 294 269 376 557
GPM 60% 62% 65% 52% 53% 51%
EBITDA (EGPmn) 102 166 232 219 303 482
EBITDA Margin 37% 47% 51% 42% 43% 44%
Net Profit after MI (EGPmn) 62 110 142 120 188 255
NPM 23% 31% 32% 23% 27% 23%
NP 2018-20 CAGR 52% 46%
Selected Ratios & Multiples
RoE 45% 59% 21% 26% 27% 26%
RoA 5% 9% 10% 13% 15% 13%
Net Debt (Cash)/EBITDA -2.04x -1.66x -0.74x 0.09x -0.25x 0.78x
P/E * 68.02x 38.15x 29.49x 27.45x 34.65x 27.95x
EV/EBITDA nm nm 3.29x 2.38x 2.70x 3.07x
EV/Sales nm nm 1.69x 1.01x 1.16x 1.36x
Operations
Number of Schools na 19 19 20
K-12 Average Tuition Fees (EGP) na 10,812 11,442 16,600
K-12 Seats Capacity na 26,400 26,400 28,300
K-12 Utilization Rate na 81% 92% 94%
Number of Faculties 6 6 7 8 9 10
High-ed Average Tuition Fees (EGP) 49,921 61,504 76,906 43,042 43,670 47,969
High-ed Seats Capacity 6,500 6,500 6,935 11,280 13,030 13,310
High-ed Utilization Rate 79% 83% 80% 49% 61% 78%
Source: Companies’ disclosures, Sigma Research
*TALM’s PE is based on the IPO price of 5.75/share

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 Taaleem Management Services (Taaleem)
IPO Note| Education | Egypt Wednesday, 31 March 2021

Investment Thesis

I. Owns and manages the largest and first private university in Upper Egypt

TALM is the owner of Nahda University (NUB), which is the first and largest private university of the 2
currently operating in Upper Egypt. NUB benefited from the first-mover advantage, enabling the university
to build a strong reputation in Upper Egypt's populated region. NUB started operations in 2006, with 3
faculties, which it managed to increase to the currently operating 8 faculties, with a total capacity of c.11k
students. Given its size and reputation, we believe NUB is well placed to take advantage of any potential
growing demand for higher education in Upper Egypt. Furthermore, NUB is located in the Beni Suef
governorate, which is in close proximity to Greater Cairo, allowing the university to attract students from
both areas: Upper Egypt and Greater Cairo.

Overview of the public and private universities in Upper Egypt

University Type Establishment Date No. of students (2018/19) PTR (2018/19) No. of faculties

Assuit Public 1957 80,940 18.5x 19

Beni Suef Public 1976 62,654 26.8x 27
El Minya Public 1976 56,697 19.0x 20
Sohag Public 1971 49,909 26.1x 15
Fayoum Public 1976 26,681 13.9x 18
Aswan Public 1974 23,036 18.6x 19
Luxor Public 2019 na na na
Qena Public 2019 na na na
NUB (Beni Suef) Private 2006 5,398 10.9x 8
Deraya (El Minya) Private 2010 3,036 18.3x 2
Merit University Private 2020 na na na
BUA (Assuit) Private 2021 to start operations in Sep-21 na 4

Source: CAPMAS, MoHE, Company disclosure, Sigma Research

II.Enjoys robust revenue growth with margins improvement and strong cash position

TALM was able to grow its revenue at a 2-year CAGR (2018-2020) of 28%, due to the continuous Y-o-Y
increase in average tuition fees, and a steady growth in the number of new students. The company’s Gross
Profit Margin (GPM) has been improving Y-o-Y, expanding from 60% in 2018 to 65% in 2020; supported by
TALM’s focus on high-margin faculties and efficient cost management. The company’s EBITDA margin has
notably expanded from 37% in 2018 to 51% in 2020, on the back of a significant drop in G&A as percentage
of revenues from 35% in 2018 to 23% in 2020. Furthermore, TALM collects tuition fees prior the beginning of
each academic semester, resulting in a strong cash position and a negative cash conversion cycle; granting
the company the luxury of an unlevered balance sheet.

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 Taaleem Management Services (Taaleem)
IPO Note| Education | Egypt Wednesday, 31 March 2021

Investment Thesis (Cont.’d)

Historical revenues and growth rate Evolution of margins

28% CAGR 70%

500.00
60% 65%
400.00 60% 62%
50%
51%
300.00 40% 47%

450.24 30% 37%

200.00
354.25 20%
273.59
100.00 10%
- 0%
FY 2017/18 FY 2018/19 FY 2019/20 FY 2017/18 FY 2018/19 FY 2019/20
Revenue (EGPmn) GPM EBITDA Margin

Source: Company disclosure, Sigma Research Source: Company disclosure, Sigma Research

Cash position and debts A negative cash conversion cycle business

(280)
300.00 (282)
(286)
250.00 (284)
(286) (292)
200.00 (288)
(290) (299)
150.00
275.12 (292)
100.00 207.79 (294)
172.41 (296)
50.00 (298)
(300)
-
FY 2017/18 FY 2018/19 FY 2019/20
FY 2017/18 FY 2018/19 FY 2019/20
Cash conversion cycle (days)
Net Cash/(Debt) (EGPmn)

Source: Company disclosure, Sigma Research Source: Company disclosure, Sigma Research

III.Focuses on high-margin faculties; capitalizes on MUVI's partnership

TALM’s main focus and expansion plans are primarily directed towards high margin faculties, such as those
pertaining to health sciences (medicine, dentistry, and pharmacy), to continue improving its margins. NUB's
margins for the dentistry, pharmacy and medicine faculties stand at 88%, 87% and 86%, respectively,
compared to an average margin of 68% for all other faculties. Said high-margin faculties accounted for 67%
of NUB's total student enrollment for the 2020/2021 academic year. Furthermore, NUB entered an exclusive
partnership with the Medical University of Vienna International (MUVI) to develop and launch the former’s
medicine faculty, as well as improve its dentistry faculty. As a result of this partnership, NUB was able to
jointly develop with MUVI a curricula for NUB's medicine and dentistry faculties, build the largest private
medicine university in Egypt, and further enhance its reputation and offerings.
.

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 Taaleem Management Services (Taaleem)
IPO Note| Education | Egypt Wednesday, 31 March 2021

Investment Thesis (Cont.’d)

IV.Operates in an industry with high barriers to entry

The process of establishing a new private university in Egypt is a long and rigorous one. To operate as an
educational institution in the country, universities must obtain a presidential decree, which requires an
approval from from the Ministry of Higher Education (MoHE) and the Prime Minister's cabinet. Furthermore,
it takes time to build a strong brand and reputation, which is sought by both students and teachers alike, not
to mention the considerable initial investment needed to build a university; such as the cost of acquiring a
land as well as construction and development costs. As a result, we believe TALM is shielded from the flood
of new entrants into the private education space.

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 Taaleem Management Services (Taaleem)
IPO Note| Education | Egypt Wednesday, 31 March 2021

Company Profile

Taaleem Management Services “Taaleem” (TALM.CA) is one Taaleem’s BoD

of the leading higher education providers in Egypt. It owns Name Designation Status
and operates Nahda University “NUB”, the first and largest Hesham Gohar Chairman Non-excutive
Ahmed Badreldin Vice Chairman Non-excutive
university in Upper Egypt, which came under its management
Mohamed El Rashidi Managing Director Excutive
in 2016. NUB has a total capacity of more than 11k students Mahmoud Attallah Board Member Non-excutive
as of the 2020/21 educational year, with 8 faculties including: Hazem Badran Board Member Non-excutive
pharmacy, dentistry, medicine, physiotherapy, engineering, Tarek Tantawy Board Member Non-excutive
Nabil Kamhawi Board Member Non-excutive
computer science, marketing & business administration, and Omar El Imam Board Member Non-excutive
media. In February 2021, the company formed a joint venture Samia EL Barrody Board Member Non-excutive
with Palm Hills Development Company (PHDC.CA), one of Youssef Haidar Board Member Non-excutive
Eskandar Tooma Board Member Non-excutive
Egypt’s leading real estate developers, to build Badya
University on a new campus in Palm Hill's Badya project, Source: Company disclosure
which spans a land area of 133k sqm.

Taaleem’s timeline

- Acquired and operated

Nahda University (NUB) - Partnered with MUVI
(Medical University of
- Launched the only Vienna International) to
specialized and largest develop the faculty of
Dental Hospital in Upper Medicine at NUB) - Launched the Faculty
Egypt of Physiotherapy
2016 2018 2020

2015 2017 2019 2021

- The establishment - Established the first - Launched the - Established the JV
of Taaleem Learning Resource Faculty of Medicine with Palm Hills to
Center in Upper develop the new
Egypt - Acquisition of c. 27 campus of Badya
acres of land in Beni- University
suef to expand NUB
campus - Announced its
intention to float its
shares on the EGX

Source: Company disclosure

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 Taaleem Management Services (Taaleem)
IPO Note| Education | Egypt Wednesday, 31 March 2021

Financials Statements (Upper-end Scenario)

Income Statement (in EGPmn) 2019a 2020a 2021f 2022f 2023f 2024f

Revenues 354.25 450.24 568.24 720.30 897.79 1,102.44

CoGS (136.09) (156.13) (192.85) (230.55) (277.01) (329.20)
Gross profit 218.16 294.11 375.39 489.76 620.77 773.24
G&A (92.78) (106.44) (143.19) (181.31) (225.82) (277.10)
Provisions (0.57) (1.00) (1.69) (2.14) (2.67) (3.28)
Other operating income 3.41 2.27 2.84 3.60 4.49 5.51
EBIT 128.22 188.94 233.35 309.91 396.77 498.38
Depreciation & amortization 37.49 42.74 56.54 61.50 68.66 74.39
EBITDA 165.71 231.68 289.89 371.41 465.44 572.78
Net financing income / (expenses) 17.53 16.38 16.13 15.22 21.60 14.54
Other income - - - - - -
Other expenses (0.66) (0.64) - - - -
EBT 145.08 204.68 249.48 325.13 418.37 512.92
Taxes (34.92) (60.64) (56.13) (73.15) (94.13) (115.41)
Net profit 110.16 144.04 193.34 251.97 324.24 397.51
Minority interests 0.08 1.66 1.34 1.75 2.25 2.76
Net profit after MI 110.08 142.39 192.00 250.23 321.99 394.76

Balance Sheet (in EGPmn) 2018a 2019a 2020f 2021f 2022f 2023f

Cash & cash equivalents 275.12 329.08 537.56 760.85 1,079.91 1,453.71
Accounts receivables 35.84 25.24 54.24 68.76 85.70 105.24
Inventory 6.49 5.06 9.16 10.96 13.16 15.64
Fixed assets (net) 503.45 651.33 708.43 791.00 857.00 947.98
Intangible assets 522.61 522.33 522.33 522.33 522.33 522.33
Other non-current assets 17.69 17.12 17.12 17.12 17.12 17.12
Total assets 1,361.19 1,550.15 1,848.84 2,171.01 2,575.22 3,062.01
Accounts payables 47.92 74.18 81.37 97.27 116.88 138.90
Deferred revenue 210.95 179.00 296.36 375.67 468.24 574.97
Provisions 738.80 5.62 5.62 5.62 5.62 5.62
CPLTD - - - - - -
Other current liabilities 28.96 46.05 46.05 46.05 46.05 46.05
LTD - - - - - -
Other non-current liabilities 99.95 154.28 154.28 154.28 154.28 154.28
Total liabilities 1,126.58 459.14 583.69 678.90 791.07 919.82
Shareholders equity 227.05 1,082.15 1,254.95 1,480.15 1,769.95 2,125.23
Minority interests 7.56 8.87 10.21 11.96 14.20 16.96
Total liabilities & equity 1,361.19 1,550.15 1,848.84 2,171.01 2,575.22 3,062.01

Cash Flow Statement (in EGPmn) 2018a 2019a 2020f 2021f 2022f 2023f

Cash flow from operations 170.37 245.19 341.32 392.38 485.92 578.64
Cash flow from investing (90.78) (173.32) (113.65) (144.06) (134.67) (165.37)
Cash flow from financing (12.26) (17.90) (19.20) (25.02) (32.20) (39.48)
Net change in cash 67.33 53.96 208.48 223.29 319.06 373.80

Valuation Indicators 2018a 2019a 2020f 2021f 2022f 2023f

P/E 38.15x 29.49x 25.07x 19.23x 14.95x 12.19x

P/B 17.90x 3.85x 3.80x 3.23x 2.70x 2.25x
EV/EBITDA nm 3.29x 2.53x 1.98x 1.53x 1.21x
EV/Sales nm 1.69x 1.29x 1.02x 0.79x 0.63x
Dividend yield na na na na na na

Profitability & Growth Ratios 2018a 2019a 2020f 2021f 2022f 2023f

Revenue growth 29% 27% 26% 27% 25% 23%

EBITDA growth 63% 40% 25% 28% 25% 23%
GPM 62% 65% 66% 68% 69% 70%
EBITDA margin 47% 51% 51% 52% 52% 52%
Net margin 31% 32% 34% 35% 36% 36%
ROE 47% 13% 15% 17% 18% 18%
ROA 8% 9% 10% 12% 13% 13%
Source: Company disclosure, Sigma Research

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 Taaleem Management Services (Taaleem)
IPO Note| Education | Egypt Wednesday, 31 March 2021

Financials Statements (Lower-end Scenario)

Income Statement (in EGPmn) 2019a 2020a 2021f 2022f 2023f 2024f

Revenues 354.25 450.24 562.42 662.65 745.51 862.79

CoGS (136.09) (156.13) (192.85) (225.16) (261.96) (305.11)
Gross profit 218.16 294.11 369.57 437.49 483.55 557.69
G&A (92.78) (106.44) (141.74) (166.89) (187.73) (217.13)
Provisions (0.57) (1.00) (1.67) (1.97) (2.22) (2.56)
Other operating income 3.41 2.27 2.81 3.31 3.73 4.31
EBIT 128.22 188.94 228.97 271.94 297.33 342.31
Depreciation & amortization 37.49 42.74 56.54 61.40 67.57 71.41
EBITDA 165.71 231.68 285.51 333.34 364.90 413.72
Net financing income / (expenses) 17.53 16.38 15.99 14.33 18.84 11.98
Other income - - - - - -
Other expenses (0.66) (0.64) - - - -
EBT 145.08 204.68 244.97 286.27 316.18 354.29
Taxes (34.92) (60.64) (55.12) (64.41) (71.14) (79.71)
Net profit 110.16 144.04 189.85 221.86 245.04 274.57
Minority interests 0.08 1.66 1.32 1.54 1.70 1.90
Net profit after MI 110.08 142.39 188.53 220.32 243.34 272.67

Balance Sheet (in EGPmn) 2018a 2019a 2020f 2021f 2022f 2023f

Cash & cash equivalents 275.12 329.08 533.09 716.59 942.12 1,197.54
Treasury bills
Accounts receivables 35.84 25.24 53.69 63.26 71.17 82.36
Inventory 6.49 5.06 9.16 10.70 12.45 14.50
Fixed assets (net) 503.45 651.33 707.27 778.40 822.66 880.67
Intangible assets 522.61 522.33 522.33 522.33 522.33 522.33
Other non-current assets 17.69 17.12 17.12 17.12 17.12 17.12
Total assets 1,361.19 1,550.15 1,842.66 2,108.39 2,387.84 2,714.52
Accounts payables 47.92 74.18 81.37 95.00 110.53 128.73
Deferred revenue 210.95 179.00 293.33 345.60 388.82 449.99
Provisions 738.80 5.62 5.62 5.62 5.62 5.62
CPLTD - - - - - -
Other current liabilities 28.96 46.05 46.05 46.05 46.05 46.05
LTD - - - - - -
Other non-current liabilities 99.95 154.28 154.28 154.28 154.28 154.28
Total liabilities 1,126.58 459.14 580.65 646.56 705.30 784.67
Shareholders equity 227.05 1,082.15 1,251.82 1,450.12 1,669.12 1,914.52
Minority interests 7.56 8.87 10.18 11.72 13.42 15.33
Total liabilities & equity 1,361.19 1,550.15 1,842.66 2,108.39 2,387.84 2,714.52

Cash Flow Statement (in EGPmn) 2018a 2019a 2020f 2021f 2022f 2023f

Cash flow from operations 170.37 245.19 335.35 338.06 361.69 412.11
Cash flow from investing (90.78) (173.32) (112.48) (132.53) (111.83) (129.42)
Cash flow from financing (12.26) (17.90) (18.85) (22.03) (24.33) (27.27)
Net change in cash 67.33 53.96 204.01 183.50 225.53 255.43

Valuation Indicators 2018a 2019a 2020f 2021f 2022f 2023f

P/E 38.15x 29.49x 21.62x 18.50x 16.75x 14.95x

P/B 17.90x 3.85x 3.23x 2.79x 2.42x 2.11x
EV/EBITDA nm 3.29x 2.57x 2.25x 2.04x 1.78x
EV/Sales nm 1.69x 1.31x 1.13x 1.00x 0.86x
Dividend yield na na na na na na

Profitability & Growth Ratios 2018a 2019a 2020f 2021f 2022f 2023f

Revenue growth 29% 27% 25% 18% 13% 16%

EBITDA growth 63% 40% 23% 17% 9% 13%
GPM 62% 65% 66% 66% 65% 65%
EBITDA margin 47% 51% 51% 50% 49% 48%
Net margin 31% 32% 34% 33% 33% 32%
ROE 47% 13% 15% 15% 14% 14%
ROA 8% 9% 10% 10% 10% 10%

Source: Company disclosure, Sigma Research

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 Taaleem Management Services (Taaleem)
IPO Note| Education | Egypt Wednesday, 31 March 2021

Sigma Capital Sales and Trading

37 Gameat El Dowal El Arabeya Street Yasmine Zeidan

Mohandseen, Giza, 12411, Egypt Head of Institutional Sales
Tel: +(202) 3335 7575 yasmine.zeidan@sigmacapital.com
Fax: +(202) 3335 0666 Tel: +(202) 3336 5845

Business Development

Karim Riad
Head of Business Development
Karim.Riad@sigma-capital.com
Tel: +(202) 3335 5353

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 Taaleem Management Services (Taaleem)
IPO Note| Education | Egypt Wednesday, 31 March 2021
Research Analysts’ Certification
Mohamed Sobol certifies that the opinions on the subject securities or issuers and any other views or forecasts expressed herein accurately reflect his
personal views and that no part of her compensation was, is or will be directly or indirectly related to the specific recommendations or views contained in
this research report. Mohamed Sobol also certifies that neither he nor his spouse or dependents hold a direct beneficial interest in the securities that are
the subject of this report as of the date of its issuance.
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• The issuers of securities mentioned in this report might have a material shareholding interest in Sigma.
• Sigma has/is/might offer corporate finance business to the issuers of securities mentioned in this report.
• Sigma might act as a Market Maker for the securities mentioned in this report.
• Sigma’s managed investment funds might hold securities mentioned in this report.
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Sigma Securities S.A.E, Level 1, Al-Foad Administrative Building, 37 Gameat El Dowal El Arabeya Street, Mohandessin, Giza 12411– Egypt
Tel: +202 3335 7575 - Fax: +202 3335 0066

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 Taaleem Management Services (Taaleem)
IPO Note| Education | Egypt Wednesday, 31 March 2021

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