Abu Dhabi's IHC-owned Ghitha Holdings works up an appetite for expansion
Timely acquisitions and widening its service portfolio pays off for ADX-listed Ghitha
Ghitha Holdings, formerly known as Zee Stores, is a leading foodstuff trading and distribution company and subsidiary of Abu Dhabi’s International Holding Company (IHC). With a market cap of Dh16.9 billion, the company's services range from food to non-food produce and provide services such as import, trading, wrapping, storage, and more.
Ghita's impressive Q3-2022 results saw earnings rise from Dh11.77 million to Dh70.05 million from expanding operations in food and agriculture. The company targets to be one of the prominent players in the region’s food trading sector while advancing the UAE's National Food Security Strategy - and make the UAE the world's most food-secure nation by 2051.
Ghitha announced unparalleled results for the nine months ended September, with Dh1.5 billion in revenue—a massive 268 per cent increase from Dh409 million a year prior. The gain was attributable to the consumer goods division, which accounted for 79 per cent of revenues and grew 190 per cent. The catering services weighed in handsomely as well.
An acquisition gain
Moreover, the Group benefitted from the acquisition of Tamween Companies Management, a provider of integrated supply solutions to the food and services industry. Tamween contributed revenue and profit to the latest results, with profits at Dh135 million. The overall numbers reflect Ghita’s efforts to diversify its product offering, expand scale and go for higher margins.
Total assets surpassed Dh4.2 billion at the end of September from Dh1.5 billion a year earlier. This reflects the high-yield generating strategic expansion in distribution, operation, frozen food, farm, and livestock divisions, leading to a healthy set of financials. Overall, the company has maintained a strong balance-sheet position, with cash and cash equivalents rising from Dh175 million in 2020 to Dh223 million in 2021, i.e. a 28 per cent increase supporting its plans of future acquisitions and establishment of new subsidiaries.
High-flying stock
Ghithia's stock price has surged 154 per cent on a year-to-date basis, signalling that the expansion and diversification strategies are reating value for the shareholders. The benefit of operating in the F&B industry is that the company can showcase sustainable and continuous growth due to the stability of being in a defensive sector, which protects it from the cyclical macroeconomic changes.
Additionally, the growing population of the UAE and the attractive tourism and hospitaility industry give it a platform to pursue growth through an expanded market presence. Ghitha Holding currently doesn't pay any dividends, which means that all of its profits have been reinvested.
This enables a strong earnings growth rate that ultimately benefits shareholders. Ghitha has solid fundamentals and a vision that should allow it to seize new prospects in UAE's F&B.