Karachi, June 18, 2021 (PPI-OT): PABC IPO: Subscribe till cap of PkR49sh

Pakistan Aluminium Beverages Cans Limited (PABC), Pakistan’s first and only aluminium beverage cans manufacturer, is in the process of listing on Pakistan Stock Exchange – 4th company to date to become part of PSX – through Ashmore Mauritius PABC Limited divesting its stake in the company (currently 51%).

The company currently operates at a capacity of 700mn (effective capacity: 600mn) cans per annum, to be ramped up to 900mn cans per annum by Jul’22 while existing infrastructure is adequate to stretch capacity to 2.4bn cans per annum.

Management estimates PABC’s earnings to register a growth of 43.1% over the next 5y which we believe to be achievable considering pent up demand of cans in the local market (easing of restrictions, potential agreement with delivery service to replace PET soft drinks with cans), and company extending exports markets.

Avg. CY22-24F earnings stand at PkR6.3/sh (adjusting for tax credit to remain conservative) where based on relative valuation metrics, the company’s valuation stands at PkR80.3/sh. Hence, we advise investors to subscribe till cap. Even at a cap price of PkR49/sh, CY22-24F PEG comes in at 0.5x.