Pakistan Aluminum Beverage Cans Limited
PABC presently offers aluminum beverage cans in 250 ml (Slim) and 300 ml (Standard) sizes while it has recently invested in its ability to produce 330 ml and 355ml (Standard) sizes. The 250 ml size can, owing to the popularity of smaller packs, has a higher share in local production with around three quarters of sales during CY20.
Share Price and Market Cap:
Pakistan Aluminum Beverage Cans Limited (PABC) is offering 93.888 million shares with a ground price of Rupees 35 per share which is approximately 3.2 billion Rupees and capital of 49 rupees per share which is approximately 4.6 billion rupees. The market capitalization of the company would be rupees 12.6 billion to 17.6 billion.
Ashmore Maturities PAC Limited is selling its 51% stake in PBAC which would be a part of their future divestment strategy.
PBAC has sold 18.05 million shares which is 5 % to Mrs. Hamida Salim Muktay from liberty group. These shares have been sold at a price of rupees 30.80 per unit and 72.2 million shares which is 20% stake, goes to Soorty Enterprise (Pvt) Limited at a price of rupees 31.85 per share. The sponsor's lock in period is for one year, this will be applicable on both parties.
RECOMMENDATION FOR INVESTORS:
There are four potential points, which may be helpful for investors:
Lowest per capita consumptions of soft drinks:
Pakistan has one of the lowest per capita consumption of soft drinks, the average 17 liters per capita. In other countries the liters per capita are as follow:
Turkey (130 Liters per Capita),
Indonesia (45 Liters per Capita),
Egypt (40 Liters per Capita),
This will help companies to grow faster than the rest of the countries.
2. Potential hike in penetration of cans:
Similarly, Pakistan has also one of the lowest penetrations of 3.6% in cans compared to global average of 19% - thus huge potential to grow.
3. Expanding footprint in export market:
In 2021, export volume is expected to increase by 77% to 303 million cans compared to 171 million cans in 2020, where the major growth is expected to come from new markets including the USA.
4. Capacity Expansion
Given the current order book (local and export) where capacity utilization is expected to reach 96% in 2021, PABC decide to expand its current rated capacity to 950 millions cans which is expected to come online by july 2022
Growth in Carbonated Soft Drinks market
The current off trade13 market size of soft drinks is 3.13 billion liters per annum and is expected to grow to 4.3 billion liters per annum at a CAGR of 6.7% on volume basis, as per Euromonitor International. Until 2025, the carbonated soft drinks market in Pakistan is forecast to reach 2.53 billion USD (in retail prices), thus increasing at a CAGR of 5.61% per annum for the period 2020-2025.14
PABC has shown strong growth in terms of sales and has been able to achieve a sales mark of PKR 5 Billion within the third full year of its operations despite a period of lockdown and border closures due to Covid-19. The gross margins and net margins have also shown exponential growth.
1. Earnings per share is based on total profit after tax divided by outstanding shares at corresponding period end
2. Break-up value per share is based on total equity of the company divided by outstanding shares at corresponding period end
3. Total borrowings include long term debt, lease liabilities, current portion of the long-term debt, and short-term borrowing
4. Total debt to total capital ratio is based on total debt (long term debt, current portion of long-term debt, and short-term borrowing) divided by total capital of the Company
5. Additional number of shares were issued in CY19 which had a direct impact on Breakup value per share and earning per share
Number of Risks:
1. Slowdown in demand from Afghanistan in case possible deterioration in relation
2. Lower than expected demand from new export markets
3. New entrant in pakistan
4. Lower than expected margins due to fluctuations in global aluminum prices,
5. Delay in upcoming expansion
6. Removal of duty protection
Where to buy?
If you are interested in buying shares of Pakistan Aluminum Beverage Cans Limited through IPO, We provide a complete guide: Follow the given link: How to Subscribe E-IPO?