Nestlé India (NESIND) 6331

Transcription

1 Result Update Rating matrix Rating : Hold Target : 64 Target Period : 12- months Potential Upside : -% What s changed? Target Unchanged EPS CYE Changed from to 4.9 EPS CY16E Changed from to Rating Unchanged Quarterly performance Q2CY Q2CY14 YoY(%) Q1CY QoQ (%) Sales EBITDA EBITDA % bps bps PAT Key financials Crore CY13 CY14 CYE CY16E Net Sales 9,61.9 9,86.3 8, ,11. EBITDA 1, ,73.4 1,23.2 2,1.4 Net Profit 1, , ,174. EPS ( ) Valuation summary CY13 CY14 CYE CY16E P/E Target P/E Div. Yield Mcap/Sales EV/EBITDA RoNW (%) RoCE (%) Stock data Particular Amount Market Capitalization ( Crore) 6141 Total Debt (CY14) ( Crore) 19.6 Cash & Investments (CY14) ( Crore) 44.8 EV ( Crore) 6, week H/L 7 / 78 Equity capital 96.4 Crore Face value 1 Price performance 1M 3M 6M 12M Nestle India HUL ITC GSK Consumer Research Analyst Sanjay Manyal sanjay.manyal@icicisecurities.com Parineeta Rajgarhia parineeta.rajgarhia@icicisecurities.com Entangled in noodles row July 31, 2 Nestlé India (NESIND) 6331 Nestlé India (NIL) posted a 2.1% decline in sales mainly due to a recall of Maggi noodles in India. The recall has resulted in a reversal of crore of sales. We believe one-time cost of recall, logistics, destruction on Maggi noodles & other related expenses are estimated to be ~ 163. Export sales also witnessed de-growth of 12.7% mainly due to lower coffee exports to Russia NIL witnessed a 362 bps savings in raw material cost to sales mainly due to a significant decline in commodity cost. However, a 21 bps higher employee expense to sales & 277 bps increase in other overhead to sales resulted in a 87 bps decline in operating margins The company posted a loss of 64.4 crore mainly due to 41.6 crore of exceptional loss due to recall of Maggi noodles Recall of Maggi noodles to hurt topline & earnings NIL recalled Maggi Noodles after FSSAI found excess lead in the product. Simultaneously, the production of Maggi noodles has been halted for domestic sales. Prepared dishes accounts for ~3% of NIL's sales. Our estimate suggests 7% has been contributed by Maggi noodles, which could be out of sales for seven months in CYE. This would result in a % decline in prepared dishes segment sales. We estimate crore of prepared dishes sales in CYE compared to crore in CY14. However, we believe the company would be able to resolve the current contentious issues related to safety of Maggi noodles. We expect revenue from prepared dishes to recover to crore in CY16E. We believe NIL would aggressively increase its A&P spends to rebuild the brand equity of Maggi Noodles, which would result in lower operating margins for CY16E. We expect the company to increase its A&P spend by ~2 bps to 11.% to the sales. Strong brand equity to aid focus on volume, going ahead NIL is the market leader in instant noodles and baby food products in India and No. 2 player in the instant coffee and chocolates segment. The company s high brand equity in its leading segments has aided it to take significant price hikes without denting its market share. Hence, despite a decline in volume and revenue growth (9.4% CAGR in CY11-14 from 2% CAGR in CY8-11) margins remained strong and strengthened from ~2% in CY8-11 to ~21.% in CY Nestlé, being one of the reputed brands in India, enjoys strong recall value in the minds of consumers. We believe that since NIL has taken a hit due to noodles fiasco, going ahead, it would shift its focus to reviving volume growth in the process of getting back the consumer confidence it enjoyed in the past. Noodles controversy medium term overhang; maintain HOLD The recent regulatory issue that NIL faced would have an impact on the topline as well as bottomline in CYE. However, we expect NIL to resolve this issue related to its noodles and invest heavily in rebuilding its brand equity by CY16E. We expect a sharp recovery in sales & earnings in CY16E at 1111 crore and 1174 crore, respectively. We believe recent events would remain an overhang on the stock in the medium term. However, NIL would be able to get back to the steady growth state from CY16E onwards. Hence, we maintain our target price of 64/share with HOLD rating on the stock. ICICI Securities Ltd Retail Equity Research

2 Variance analysis Q2CY Q2CYE Q2CY14 YoY (%) Q1CY QoQ (%) Comments Net Sales 1, ,2. 2, , Net sales de-growth can be attributed to Maggi noodles recall coupled with 12.7% decline in export sales Operating Income Operating income increased mainly due to higher realisation of export incentives Raw Material Expenses , , Raw material cost to sales were down 362 bps mainly due to decline in commodity costs Employee Expenses Other operating Expenses EBITDA EBITDA Margin (%) bps bps Operating margin contracted 1 bps mainly due to lower sales Depreciation Interest NA 3.4 NA Other Income PBT Exceptional Items NA. NA The company realised a one-time exceptional loss of 41.7 crore due to costs arising out of recalling Maggi noodles off the retail stores' shelves across India Tax Outgo PAT Change in estimates CYE CY16E ( Crore) Old New % Change Old New % Change Comments Sales 1,28.7 8, We expect sales growth & earnings to remain under pressure for CY on the back of regulatory issue faced by the company EBITDA 2,81. 1, ,231. 2, EBITDA Margin(%) bps bps PAT 1, EPS ( ) Assumptions Current Earlier Comments CY12 CY13 CY14E CYE CY16E CYE CY16E Gross Sales ( crore) Milk Product and Nutrition 3,89.4 4,71.2 4,7.2,43.7,613.7,43.7,6.7 Beverages 1, , , ,477. 1, ,477. 1,69.4 Prepared dishes 2,43.2 2, , ,48.6 2,73.3 2, ,7.2 Maggi noodles comprised major sales in the prepared dishes category. We expect prepared dishes category to witness significant de-growth in sales & volumes in CY. We believe there would be some respite for the company in CY16 Chocolate & confectionery 1, , ,23.2 1, ,22.3 1, ,21. Volume Growth (%) Overall Volume Growth Milk Product and Nutrition Beverages Prepared dishes Chocolate & confectionery ICICI Securities Ltd Retail Equity Research Page 2

3 Company Analysis Maggi recall takes a toll on volumes & revenues Nestlé s revenue growth has declined from 2.9% CAGR (CY7-11) to 9.4% CAGR (CY11-14) following the incessant price increases impacting volume growth, declining urban consumption demand and increasing competitive intensity in its segments. NIL s average price increases have gone up from ~4% (CY8-1) to ~8.6% (CY11-14), consequently pulling down its volume growth from ~16% (CY8-1) to ~.7% (CY11-14). Apart from the higher price hikes, the slowdown in urban discretionary and premium segment demand have also impacted Nestlé s revenue growth as Nestlé s portfolio is largely urban centric and discretionary in nature. Further, we believe NIL s volume growth is also restricted due to increasing competitive pressures across its categories (chocolates Cadbury s, milk Amul, Britannia) with leading FMCG players getting aggressive given the large untapped opportunity in the segment. The recent regulatory issue faced by NIL due to which sale of Maggi noodles was banned in India has also impacted the volumes & revenue growth of the company in the near to medium term. As a result, we expect 26.3% decline in overall volumes for the company during CYE. However, we believe that NIL would be able to resolve this matter by taking appropriate steps and there would be some respite for its prepared dishes segment by CY16E & some steadiness would be restored in terms of sales. We estimate 33% volume growth in CY16E due to the low base effect of CYE. We expect revenues to at CAGR 6.4% in CY14-16E. Exhibit 1: Revenues to grow at CAGR of 6.4% in CY14-16E CY8 CY9 CY1 CY11 CY12 CY13 CY14E CYE CY16E Net Sales ( crore) - LHS Net Sales Growth (%) - RHS ICICI Securities Ltd Retail Equity Research Page 3

4 Exhibit 2: Decline of % in prepared dishes segment impacted overall sales & volume CY8 CY9 CY1 CY11 CY12 CY13 CY14E CYE CY16E -6.4 Milk products & nutrition Volume Growth (%) Price Growth (%) Milk products & nutrition, the largest contributor to NIL s revenues (4.1% of gross revenues in CY14) with brands Cerelac, NAN, Nestlé A+, Nestlé Milkmaid, has witnessed a significant decline in revenue growth from 2.8% CAGR in CY7-CY11 to 1.9% CAGR in CY The decline has been led by a significant increase in prices in CY11 and CY12 by ~2% following the increasing milk prices. Though the price increases were modest in CY14 there was no revival in volume growth. We believe that in the wake of the robust price increases for two consecutive years, NIL would have lost some market share in the segment that has failed to revive its volume growth. During the same period, the decline in urban consumption demand also took a toll on the company s growth. Going ahead, though we expect price increases to be the key revenue driver, it would be at 6% keeping volume growth at 4.%. We estimate revenues from milk products & nutrition will grow at 1.8% CAGR in CY14-16E. Exhibit 3: Revenue growth to remain at 1.8% CAGR in CY14-16E Exhibit 4: Revenue growth to be largely price led CY9 CY1 CY11 CY12 CY13 CY14E CYE CY16E CY9 CY1 CY11 CY12 CY13 CY14E CYE CY16E Revenues ( crore) - LHS Revenue Growth (%) - RHS Volume growth (%) Realisation growth(%) ICICI Securities Ltd Retail Equity Research Page 4

5 Nescafe was the company s largest brand until mid-nineties Beverages NIL s beverage portfolio (13.2% of gross revenues in CY14) comprises brands like Nescafe and Nestea. Though NIL enjoys high brand equity in the instant coffee category in the country, increasing competition (HUL s Bru) and lower demand in the segment has kept the volume and value growth low at 2.6% and 1.3% CAGR (CY7-14), respectively. Going ahead, we remain cautious on volume growth and expect prices to continue dominating the revenue growth from this segment. We expect the beverages segment to witness volume growth of 4.% (CAGR CY14-16E) and price growth of 6% (CAGR CY14-16E) keeping value growth at 1.8% CAGR (in CY14-16E). Exhibit : Beverages revenue growth to remain at 1.8% CAGR CY9 CY1 CY11 CY12 CY13 CY14E CYE CY16E 2 1 Exhibit 6: Volume growth expected to remain tepid CY9 CY1 CY11 CY12 CY13 CY14E -11. CYE CY16E -1 - Revenues ( crore) - LHS Revenue Growth (%) - RHS Volume growth (%) Realisation growth(%) Prepared dishes & cooking aids Prepared dishes & cooking aids (29.2% of gross revenues in CY14) comprises NIL s largest brand Maggi. It includes sales of instant noodles, pasta, cooking aids, soups and sauces. Enjoying a virtual monopoly in the segment until FY1, NIL s revenues from the segment grew at 28.9% CAGR in CY7-11 led by strong volume growth of 22.2% and price led growth of.%. Volume growth was strong until CY11 but started moderating beyond that following the increasing competition in the segment (ITC s Sunfeast, HUL s Knorr, GSK Consumer s Foodles) and higher prices increases (~1% in CY11, ~7% in CY13 & ~.8% in CY14). However, with instant noodles off Indian retail shelves since June 2, NIL is struggling to resolve the matter over ban on its Maggi noodles. We expect prepared dishes sales & volumes to plunge by % in CYE as a result. However, we believe that NIL would be able to resolve this issue & restore steadiness in this segment s revenues by CY16E. We estimate revenues in this segment at crore & crore in CYE & CY16E respectively. Exhibit 7: Prepared dishes revenues and revenue growth Exhibit 8: Noodles recall impacted prepared dishes segment growth CY9 CY1 CY11 CY12 CY13 CY14E CYE CY16E CY9 CY1 CY11 CY12 CY13 CY14E CYE CY16E - Revenues ( crore) - LHS Revenue Growth (%) - RHS Volumes growth (%) Realisation growth(%) ICICI Securities Ltd Retail Equity Research Page

6 Chocolate and confectionery NIL s chocolate & confectionery segment (12.4% of gross revenues CY14) includes strong brands as KitKat, Munch, Milky Bar, Bar One and Polo. Following the considerable price hikes in CY11 and CY12, NIL s chocolate volumes have witnessed a drastic setback. Though it is the second largest player in the segment (leader is Cadbury) we believe the decline in volume growth is concerning given the increasing competition from the market leader and other players. However, with the increasing marketing initiatives and new launches (dark chocolates, Alpino, KitKat Senses), we believe volume growth should gain traction over time. We estimate volume and value CAGR in CY14-16E at 3.% and 1.2%, respectively, against 3% and 13.6% in CY8-13, respectively. Exhibit 9: Revenue growth to remain at current levels Exhibit 1: Revival in volume growth to gain traction CY9 CY1 CY11 CY12 CY13 CY14E CYE CY16E CY9 CY1 CY11 CY CY CY14E CYE CY16E Revenues ( crore) - LHS Revenue Growth (%) - RHS Volumes growth (%) Realisation growth(%) Hence, we believe NIL s subdued volume growth since CY12 has largely been led by the company s exceptional price hikes with the aim of maintaining its margins at the cost of lost volume growth. Though we do expect higher marketing initiatives and lower price hikes to aid in recovery of volume growth given the company s high brand equity across segments, we believe the recovery would be slower as near term concerns of demand slowdown continue to persist. ICICI Securities Ltd Retail Equity Research Page 6

7 Loss of sales to impact margins in near term NIL s margins remained healthy at ~2% until CY1 with strong volume growth of ~16% and moderate price hikes of ~4%. However, in CY11-14, higher price hikes at ~1% pushed margins to ~22% while pulling down volume growth to ~3%. The increase in margins at the cost of growth clearly shows the concentration of the company on maintaining margins. However, the Maggi noodles recall has led to lower net sales for the company, which impacted its margins adversely. Going ahead, we believe that after resolution of the recent row over the noodles, margins would revive by certain extent to 18.% in CY16E as we expect some relief for the company on the revenues front until CY16E. Exhibit 11: EBITDA margin (%) trend CY8 CY9 CY1 CY11 CY12 CY13 CY14 CYE CY16E EBITDA Margins (%) PAT growth marred by Maggi row NIL s PAT growth remained healthy at 23.% CAGR in CY7-11 following healthy revenue growth and sustained higher margins. However, PAT growth moderated, thereafter, until CY13, following the slowdown in revenue growth and increase in the interest cost and depreciation impacting the earnings. The increase in interest and depreciation during the period was following the aggressive capex of ~ 3 crore to double its existing capacity. With the company having repaid its debt completely in July 214, we expect savings in interest cost would aid earnings from CYE onwards. However, NIL realised one-time exceptional loss of 41.7 crore in Q2CY arising out of costs incurred by the company due to the nationwide recall of Maggi noodles. We expect this to adversely affect the earnings estimated at 29.6 crore in CYE and 1174 crore in CY16E from crore in CY14. ICICI Securities Ltd Retail Equity Research Page 7

8 Exhibit 12: PAT growth trend CY9 CY1 CY11 CY12 CY13 CY14E CYE CY16E Net Profit ( crore) PAT Growth (%) ICICI Securities Ltd Retail Equity Research Page 8

9 Outlook & valuation With a population of ~12 crore, India is one of the largest consumer markets in the world. The categories in which NIL operates have comparatively lower penetration in India (instant noodles, packaged milk, chocolates) when compared to the world economies. Further, with penetration in urban India itself being low, rural India has further lower penetration, thereby providing huge scope of growth for the company. The recent regulatory issue faced by NIL would have an impact on the topline as well as the bottomline in CYE. However, we expect NIL to resolve this issue related to its noodles and invest heavily in rebuilding its brand equity by CY16E. We expect sharp recovery in sales and earnings in CY16E at 1111 crore and 1174 crore, respectively. We have cut our EPS estimates for CYE and CY16E by 4.9% and 9.3%, respectively. We believe the recent events would remain an overhang on the stock in the medium-term. However, NIL would be able to get back to steady growth state from CY16E onwards. Hence, we maintain our target price of 64/share with a HOLD rating on the stock. Exhibit 13: Valuations Sales Growth EPS Growth PE EV/EBITDA RoNW RoCE ( cr) (%) ( ) (%) (x) (x) (%) (%) CY CY CYE CY16E ICICI Securities Ltd Retail Equity Research Page 9

10 Company snapshot 7, 7, 6, 6,,, Target Price 64 4, 4, 3, 3, 2, 2, Jan-1 Apr-1 Jul-1 Oct-1 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan- Apr- Jul- Oct- Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Source: Bloomberg, Company, ICICIdirect.com Research Key events Date Event Aug-1 Coffee and milk prices start trending up limiting gross margin expansion; FMCG Index returns- ~2% MoM CY1 ITC and GSK Consumer enter instant noodles segment intensifying competition in the near monopoly segment for Nestlè Jul-11 Decline in coffee prices (~11% since April, 211); revenue growth & margins back to 2%+; FMCG Index return - ~33% in Q2CY11 Jan-12 Volume growth in CY11 dips to 7% vs. 17% in CY1; increasing prices due to higher input cost impacts volume growth; ITC gets aggressive in noodles segment with HUL re-launching Knorr in the segment H1CY12 Declining volume growth keeps revenue growth below %; higher margins (+21%) continue to drive profitability (+% YoY); stock supported by rising FMCG index (~26% return YoY) as a safe haven during underperforming markets CY12 Stock return ~13% due to less than 1% volume growth in CY12, thereby not justifying high valuations; FMCG Index return CY12 - ~3% Apr-13 Intensifying competition and incessant price increases across categories drags revenue growth to ~9% with volume growth at 2-3% Jul-13 Decline of ~2% in coffee prices YoY; revival in revenue growth to ~12% supported by price cuts in milk products and new launches in noodles segment; FMCG continues to remain the preferred sector among investors (FMCG Index return ~3% YoY in Q2CY13) Nov-13 Rumours of buyback by the parent drive stock price; revenue growth remains muted Jan- Softening commodity prices aiding the company's operating margins Apr- UP FSDA orders recall of 2,, packets of Maggi noodles citing higher lead content beyond permissible limit thereby declaring it unsafe Jun- FSSAI bans sale of Maggi noodles in India Top 1 Shareholders Rank Name Latest Filing Date % O/S Position (m) Change (m) 1 Nestle SA 3-Jun Maggi Enterprises, Ltd. 3-Jun Life Insurance Corporation of India 3-Jun ARISAIG Partners (Asia) Pte. Ltd. 3-Jun Aberdeen Asset Management (Asia) Ltd. 3-Jun Vontobel Asset Management, Inc. 3-Apr First State Investment Management (UK) Limited 31-Mar The Vanguard Group, Inc. 3-Jun BlackRock Institutional Trust Company, N.A. 3-Jun Franklin Advisers, Inc. 28-Feb Source: Reuters, ICICIdirect.com Research Shareholding Pattern (in %) Jun-14 Sep-14 Dec-14 Mar- Jun- Promoter FII DII Others Recent Activity Buys Sells Investor name Value Shares Investor name Value Shares Michel & Cortesi Asset Management AG 9.91m.1m Aberdeen Asset Management (Asia) Ltd m -.41m Franklin Advisers, Inc. 8.47m.9m First State Investment Management (UK) Limited m -.2m BlackRock Institutional Trust Company, N.A. 4.77m.m ICICI Prudential Asset Management Co. Ltd m -.16m Axis Asset Management Company Limited 3.18m.3m IDFC Asset Management Company Private Limited m -.11m The Vanguard Group, Inc. 1.8m.2m Jupiter Asset Management Ltd m -.1m Source: Reuters, ICICIdirect.com Research ICICI Securities Ltd Retail Equity Research Page 1

11 Financial summary Profit and loss statement Crore (Year-end December) CY13 CY14 CYE CY16E Total operating Income Growth (%) Raw Material Expenses 4, ,24. 4,276.,17.1 Employee Expenses Marketing Expenses ,277.7 Administrative Expenses ,166.6 Other expenses , Total Operating Expenditure 7, ,781. 7,46. 9,114.1 EBITDA 1, ,73.4 1,23.2 2,1.4 Growth (%) Depreciation Interest Other Income PBT 1, , ,24.1 1,72.2 Others Total Tax PAT 1, , ,174. Growth (%) EPS ( ) Cash flow statement Crore (Year-end December) CY13 CY14 CYE CY16E Profit after Tax 1, , ,174. Add: Depreciation (Inc)/dec in Current Assets Inc/(dec) in CL CF from operating activities 1, , ,273.2 (Inc)/dec in LT loans & adv (Inc)/dec in other investments (Inc)/dec in Fixed Assets Others CF from investing activities Issue/(Buy back) of Equity.... Inc/(dec) in loan funds , Dividend paid & dividend tax ,118.4 Inc/(dec) in Sec. premium.... Others CF from financing activities , ,118.4 Net Cash flow Opening Cash Closing Cash Balance sheet Crore (Year-end December) CY13 CY14 CYE CY16E Liabilities Equity Capital Reserve and Surplus 2, ,74.8 2, ,766.7 Total Shareholders funds 2, , ,87.6 2,863.2 Total Debt 1, Deferred Tax Liability Long Term Provisions 1, , , ,88.7 Total Liabilities 4, ,464. 4,34.4 4,69. Assets Gross Block 4,93.2,9.,19.,29. Less: Acc Depreciation 1,33.9 1, , ,48.9 Net Block 3, , , ,66. Capital WIP Total Fixed Assets 3,664. 3, ,166. 2,94.8 LT Loans & Advances Inventory ,2.3 Debtors Loans and Advances Current Investments Cash Total Current Assets 2,32.7 1, ,7.6 2,73.8 Creditors Provisions Other Current Liabilities Total Current Liabilities 1, , ,43.3 Net Current Assets ,3. Application of Funds 4, ,464. 4,34.4 4,69. Key ratios (Year-end December) CY13 CY14 CYE CY16E Per share data ( ) EPS Cash EPS BV DPS Cash Per Share Operating Ratios (%) EBITDA Margin PBT / Net Sales PAT Margin Inventory days Debtor days Creditor days Return Ratios (%) RoE RoCE RoIC Valuation Ratios (x) P/E EV / EBITDA EV / Net Sales Market Cap / Sales Price to Book Value Solvency Ratios Debt/EBITDA.2... Debt / Equity.... Current Ratio Quick Ratio ICICI Securities Ltd Retail Equity Research Page 11

12 ICICIdirect.com coverage universe (FMCG) CMP M Cap EPS ( ) P/E (x) Price/Sales (x) RoCE (%) RoE (%) Sector / Company ( ) TP( ) Rating ( Cr) FYE FY16E FY17E FYE FY16E FY17E FYE FY16E FY17E FYE FY16E FY17E FYE FY16E FY17E Colgate (COLPAL) 2,64 2,36 Hold 27, Dabur India (DABIND) Buy 1, GSK CH (SMIBC) 6,268 7,193 Buy 2, Hindustan Unilever (HINLEV) 921 1,17 Buy 198, ITC Limited (ITC) Buy 22, Jyothy Lab (JYOLAB) Hold 4, Marico (MARIN) Hold 24, Nestle (NESIND) 6,331 6,4 Hold 61, Tata Global Bev (TATTEA) Hold 9, VST Industries (VSTIND) 1,729 1,7 Hold 2, ICICI Securities Ltd Retail Equity Research Page 12

13 RATING RATIONALE ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com assigns ratings to its stocks according to their notional target price vs. current market price and then categorises them as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and the notional target price is defined as the analysts' valuation for a stock. Strong Buy: >%/2% for large caps/midcaps, respectively, with high conviction; Buy: >1%/% for large caps/midcaps, respectively; Hold: Up to +/-1%; Sell: -1% or more; Pankaj Pandey Head Research pankaj.pandey@icicisecurities.com ICICIdirect.com Research Desk, ICICI Securities Limited, 1st Floor, Akruti Trade Centre, Road No 7, MIDC, Andheri (East) Mumbai 4 93 research@icicidirect.com ICICI Securities Ltd Retail Equity Research Page 13

14 ANALYST CERTIFICATION We /I, Sanjay Manyal, MBA (Finance) and Parineeta Rajgarhia, MBA (Finance), Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. Terms & conditions and other disclosures: ICICI Securities Limited (ICICI Securities) is a Sebi registered Research Analyst having registration no. INH99. ICICI Securities is full-service, integrated investment banking and is, inter alia, engaged in the business of stock brokering and distribution of financial products. 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