Raya Holding


SWOT Analysis

Strengths

  • Large and diversified products and services portfolio.

  • High-profile clientele in both the public and private sectors.

  • Wide geographic footprint with offices across MENA, Africa and North America.

  • Established partnerships with leading IT and telecoms firms, including Cisco.

Weaknesses

  • Overdependence on the trade division of its business, which contributes more than three-quarters of consolidated revenues.

Opportunities

  • Egypt is well placed to become a major ICT hub in MENA despite its ongoing political and economic crisis.

  • Pioneer move into niche service areas such as smart buildings could create competitive advantage and sustainable revenue stream.

Threats

  • Political instability and weak macroeconomic fundamentals in Egypt could reduce investor appetite.

  • Efforts by some countries, such as the UAE and Qatar, in the MENA region to develop their ICT sector is attracting major global players to the region.

Overview

Raya Holding was established in 1999 following the merger of seven leading IT companies in Egypt. The firm operates mainly in four divisions - namely information technology, contact centre, trade and smart buildings development. In addition to its main lines of business, Raya has recently established two new subsidiaries as part of its diversification strategy. These are Ostool, a land and river transport development firm, and BariQ, a plastic recycling and re-manufacturing firm.

Raya is headquartered in Cairo and was listed on the Egypt Stock Exchange in 2005. The firm had around 3,500 employees as of the end of 2010 across multiple locations in Egypt, Saudi Arabia and the UAE, Algeria, Nigeria and the USA. Raya Holding serves customers across most regions, including North America, Europe, Austria, the Middle East and Africa.

Services

Raya Holding provides systems integration, networking, value-added reseller services and e-business consulting to more than 250 corporate and SME customers in Egypt through its diversified product and services portfolio.

  • The information technology division provides: 

  • Infrastructure services such as networking, security, enterprise management, voice and IP communication, video conferencing and Microsoft services.

  • Carrier class services such as switching, transmission, data and wireless solutions.

  • Business solutions such as enterprise resource planning, CCRM, data warehousing, enterprise asset management, document management, systems, business intelligence, business process management, e-learning, systems and enterprise architecture solutions.

The information technology division also offers software development, datacentre outsourcing, and information technology training services.

  • The contact centre division offers inbound and outbound call centre services, including prospecting, customer acquisition, customer value growth and customer care services.

  • The trade division offers distribution, retail and maintenance services for major handset brands and other device manufacturers, including Nokia, Samsung, HP, Dell, Intel and Microsoft.

  • The smart buildings division develops smart commercial buildings using the firm's expertise in IT systems to integrate state-of-the-art technologies, including IP telephony, video conferencing, security, digital signage and energy management.

Raya Holding is active in the finance, telecoms, government, education, oil and gas, manufacturing, real estate, hospitality and automotive industries.

Strategy

Raya Holding's growth strategy is largely based on geographical expansion, service diversification and value-added services. Raya has set up offices in Saudi Arabia and Dubai internet city; Algeria, to serve the rest of the North Africa region; Nigeria in Sub-Saharan Africa; and the USA. In 2011, the firm secured EGP100mn credit financing to invest in its new services portfolio, including BariQ, Ostool and a newly established subsidiary for social media services. The three subsidiaries will garner total investments of around EGP100mn by 2014.

Raya also aims to take advantage of Egypt's government plans to develop the country as a major outsourcing centre and is building up its contact centre division. The firm has around 2,000 contact centres and 200 BPO agents serving clients such as Dell, Microsoft and financial institutions across the region.

Meanwhile, Raya Smart Buildings, one of the first Egyptian firms in the field of smart building, is expected to take in around EGP700mn during the three years to 2014. The firm has 115,000m 2 of developed land in Cairo, 6 th of October and Smart Village.

Recent Financial Results

For the nine months to December 2011, Raya Holding reported consolidated revenues of EGP1.851bn, a 3% y-o-y decline compared to the same period in 2010. The company also reported a 0.9% y-o-y decline in gross profit of EGP219.9mn while net profit fell by 12.5% y-o-y to EGP26mn. EBITDA for the nine months to December 2011 was EGP68.6mn, up from EGP67mn a year earlier.

For the three months to the end of December 2011, Raya Holding reported a 12.7% y-o-y increase in consolidated revenues to EGP727.2mn from EGP645.3mn a year earlier. The firm also reported 14.2% and 40.5% increases to gross profit and net profit to reach EGP81.6mn and EGP12.6mn respectively. EBITDA for the three months to December 2011 was EGP28.8mn, up from EGP19.8mn for the same period in 2010.

The contrast between Raya Holding's revenue and net profit over the nine months and the last three months of 2011 suggests the political and economic crisis in Egypt and most of the MENA region during 9M11 had a significant effect on its operations and financial performance.

A breakdown of the firm's revenue for the nine months to December 2011 shows that the trade business division accounted for 83.3% of total revenues, considerably up from 77.6% a year earlier. The information technology division accounted for 10.8%, down from 16.7% in 2010, while the call centre division accounted for 4.3% compared to 3.2% in 2010. The remaining 1.6% of revenues was generated by international services, smart buildings, Ostool and other smaller divisions.

Recent Developments

In January 2012, Raya Holding won a contract from the Egyptian credit bureau I-Score to design, build and implement the bureau's new datacentre with a service level agreement (SLA) warranty for four years. The project was due to go live in February 2012.

In September 2011, Raya Facility Management, a subsidiary of Raya Holding, launched facility management and maintenance services aimed at developing conditions that will prolong infrastructure lifespan and functional systems. The solution is expected to attract the interest of private and public real estate developers keen to improve maintenance cost efficiencies. In July 2011, Raya Holding selected Abaza Village in al-Fayoum to develop its infrastructure, health and education solutions, in partnership with Bedaya NGO.

Among other major projects in 2010, Raya Holding  implemented a Windows 7 Upgrade Project for Banque du Caire, one of the oldest banks in Egypt. Raya Holding  undertook the upgrading of the bank's desktop operating system on computers in its head office. The company supplied services including training on the new deployment tools for Microsoft Windows, and application compatibility testing for the bank's existing applications with Windows 7. The new operating system was rolled out for more than 700 employees at the bank's headquarters. Meanwhile, Raya Holding  also implemented a major Oracle ERP project for the Egyptian Petrochemicals Holding Company  (ECHEM), one of the largest petrochemicals holding companies in the region.

Financial Data

  • Annual Revenues (March 2008): EGP2.176bn

  • Annual Revenues (March 2009): EGP1.870bn

  • Annual Revenues (March 2010): EGP2.554bn

  • Quarterly Revenues (June 2011): EGP496.2mn

  • Quarterly Revenues (September 2011): EGP627.2mn

  • Quarterly Revenues (December 2011): EGP727.2mn

  • Annual Net Profit (March 2008): EGP53.9mn

  • Annual Net Profit (March 2009): EGP41.6mn

  • Annual Net Profit (March 2010): EGP43.6mn

  • Quarterly Net Profit (June 2011): EGP1mn

  • Quarterly Net Profit (September 2011): EGP12.4mn

  • Quarterly Net Profit (December 2011): EGP12.6mn

Company Details

  • Raya Holdings

  • 26th July Street

    Touristic Zone

    6th of October

    12568

    Egypt

  • +(202) 382 76 001

  • info@rayacorp.com

  • www.rayacorp.com

This article is tagged to:
Geography: Egypt