As many as three new companies were listed (other than Modarabas) on Pakistan Stock Exchange (PSX) during the year 2018. The new entrants raised Rs 4.3 billion cumulatively during 2018, which was 49 percent lower than the amount of Rs 8.5 billion raised in 2017, according to a research report. AGP Limited (AGP), a pharmaceutical company, through its Offer For Sale (OFS) collected 65 percent of the total raised capital during 2018. The company offered 35 million shares while OBS Pakistan and Muller & Phipps Pakistan sold 20 million and 15 million shares, respectively.
Two other IPOs raised nearly equal amounts, that is, Matco Foods (MFL) raised Rs 758 million while At-Tahur (PREMA) raised Rs 770 million. To note, MFL is a basmati rice exporter while PREMA is operating in the dairy segment of Pakistan.
MFL remained top performing IPO with IPO to date return of 16 percent followed by AGP with 01 percent return, while, PREMA showed a decline of 6 percent, a research report of Topline Securities said.
"Reportedly around 8 IPOs are scheduled for 2019 where the largest IPO is expected in the textile sector," the research report said, adding that Interloop Limited, one of the largest sock suppliers to world leading players such as Nike, Adidas, Puma, etc, is planning to raise around Rs 5 billion to finance its expansion plans. Other IPOs are expected from consumer, auto parts and pharmaceuticals segment among others.
AGP: First pharma sector's Offer For Sale (OFS) after 22 years, successfully raised around Rs 2.8 billion from local, foreign and institutional investors'. Bids in book building were received in excess of Rs 5 billion. This OFS consisted of 35 million shares (20 million by OBS Pakistan and 15 million by Muller and Phipps Pakistan). Other majority shareholders of company include, JS bank, Bank Alfalah, and High-Q Pharma. Currently 50.5 percent of the company's stake is held by OBS Pakistan.
AGP has highest gross/net margins of 55 percent/24 percent versus industry average of 43 percent/14 percent. Key products of company include, Ceclor, Rigix, and Osnate, which account for 60 percent of company's revenue. The company plans to launch 6 products every year and recently it launched Hetraz, a drug to cure breast cancer. Pakistan's per capita pharma spending is around $15/annum against $35/annum of world as per the company. Pharma sector in Pakistan is growing at 5-Year CAGR of 13 percent and local companies hold 68 percent of overall market.
Matco Foods: One of the largest rice exporter company 'Matco Foods' or MFL' announced its Initial Public Offering (IPO) to finance its expansion plan worth Rs 758 million in areas of rice glucose and rice protein. At time of IPO, floor/strike price was Rs 26/share implied P/E of 8.5x. IPO to date, the stock has returned around 16 percent to investors (adjusted for 5 percent bonus and cash dividend of 0.4/share).
The Company generates nearly 70 percent of its revenue from export business and has attained 5-Year (FY14-18) revenue CAGR of 2 percent with average gross margins of 13 percent. Rice production in Pakistan has seen increase of 34 percent in last 12 years from 5.5 million tons in FY06 to 7.4 million tons in FY18. While at the same time, cotton production has declined by 8 percent during same period to 12 million bales in FY18.
Al Tahur: Al-Tahur offered 25 percent of its post issued paid up capital via IPO at floor price of Rs 20 (including premium of Rs 10/share). However, the company managed to subscribe its share at Rs 21/share. The Company has marked its retail presence across Pakistan at over 3000+ stores including Kashmir and Gilgit Baltistan. The Company aims to bring its herd size in excess of 4,000 animals from current 2,300. PREMA has attained 5-Year (FY14-FY18) revenue CAGR of 27 percent and while its gross margins averaged at 44 percent. Pakistan is among top three dairy producing countries, where processed milk market share is around 9 percent.
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