Pakistan Technology_ IPO_Octopus Digital-subscribe till cap of PkR40.6 , (AKD Daily, Sep 07, 2021)
AKD Daily
Pakistan Technology_ IPO: Octopus Digital—subscribe till cap of PkR40.6
- Octopus Digital is set to go public where it plans to raise an amount of PkR793mn by offering 27.4mn shares at a floor price of PkR29/sh. Octopus Digital Ltd. is a wholly owned subsidiary of Avanceon Ltd.. Company plans to develop 29 independent intellectual properties under different categories from which company will be providing two main offerings, Topware and Omni Connect.
- Pakistan is going through an increase in acceptance of digitization where the industrial sector is also trying to catch up with the global norms, driving phenomenal growth in revenues of SYS/AVN at a CAGR of 41/41% for CY15-20.
- Octopus Digital expects revenue to stage a CAGR of 60% for CY20-26 while bottomline is expected to increase by 63% over the period where initial growth is expected to arise from AMS services while from 2023 onwards, Topware and then later Omni Connect are to form the backbone of growth as company expands its services overseas.
- Even though the prospects remain bright, projections provided by the management look optimistic given historically AVN’s revenue has grown at a CAGR of 41% over CY15-20 while revenues form AMS have grown at a CAGR of 19%. Also, Topware and Omni Connect will be new products and can potentially take time to create a space for themselves.
- We have used P/E and P/S based on a mix of projections provided by the company and latest reported result to incorporate a toned down version of growth and even after that, our TP comes out at PkR63.7/sh, and hence we adopt the stance of ‘subscribe till cap of PkR40.6/sh’ for the stock.
AKD Research
Avanceon Ltd. Avanceon Limited is a provider of industrial automation, process control and systems integration, as well as energy management solutions. The Company's segments are After Marketing Support (AMS), Core Business, Specialized Business, Engineering services, and Middle East and USA. The AMS segment is engaged in the provision of services as technical supports and service level agreements and related spares. The Core Business segment includes Application Based Solutions (ABS), Systems and Products. ABS sales include the supply of systems, power products, variable speed drives and variable frequency drives. Systems sales are embedded solutions of multiple original equipment manufacturers (OEM) equipment. Products segment includes sales of motors, analyzers and other specialized products of OEMs. The Specialized Business segment includes Energy Management Systems and High End Solutions. It provides solutions to various industries, such as oil and gas, chemicals and pharmaceuticals.
AKD Securities Ltd. is one of the leading securities firm in Pakistan, providing a comprehensive range of investor focused services, including equity brokerage, economic and securities research, investment banking and financial advisory services. AKD Securities accounts for more than 6% of the average daily value of the Karachi Stock Exchange. AKD Securities was the first brokerage house to launch an online trading platform in Pakistan in November 2002 and now has the largest market share with over 6000 customers. This has helped diversify and expand the retail investor base in the country and ushered in a whole new universe of investors to the stock market.
AKD Securities Ltd. caters to a diversified group of domestic and international institutional investors, high net worth individuals and upscale retail clients, including expatriate Pakistanis. With high quality research, unparalleled execution and distribution capability for both regular and large block trades, AKD Securities Ltd. has earned an outstanding reputation in the Pakistani securities industry.Outside of commercial banks, AKD Securities Ltd. is one of the biggest capital market firms in the country. AKD Securities is the leader in raising and providing risk capital in underwriting, market making and mergers and acquisitions in Pakistan. Good corporate governance and professionalism are emphasized throughout the firm and AKD Securities Ltd. is amongst the very few companies to have introduced a firm-wide comprehensive CODE of ETHICS, overseen by an independent compliance manager.Ultimately, our success is based on the quality of service we provide to our customers and the trust and confidence reposed in us by them. Our focus, therefore, remains on customer satisfaction at all levels in the company.
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