Analysts urge public to take advantage of DGC IPO

Muscat: Research analysts from various brokerage houses in Oman have strongly urged the public to subscribe to the initial public offering (IPO) of Dhofar Generating Company (DGC) SAOG (under transformation).
Reports have highlighted the strategic importance of DGC, the largest power producer in the Dhofar region, as well as its stable and predictable long-term revenues and cash flows, attractive dividend yields, and the proven track record of its strong group of committed founding shareholders, as key factors underpinning the positive response to the IPO.
“The recommendations in favour of the DGC IPO are a validation of the confidence reposed on the company and the industry,” said Naif Al Awaaid, CEO of DGC. “The feedback from analysts regarding the strength of the offering has been positive."
"Analysts believe that the IPO is attractively priced, and they have recommended buying with a potential upside of between 10.4 per cent and 14.2 per cent from the offered IPO price,” he added. “Such a positive analyst consensus is obviously pleasing and also reflects the sentiment of the investors we’ve met so far. We’re positive that investors will appreciate the offer, not only in terms of returns on investment, but also to leverage the opportunity offered by the sector.”
Recommendations
“Based on our valuation methodology, we are assigning DGC a fair value of OMR0.296 per share, which is 14.2 per cent above the IPO issue price of OMR0.259 per share,” revealed NBO Investment Research.
“We value Dhofar Generating Company at OMR0.294 per share and recommend that investors subscribe to the offer, which has an upside potential of 13.5 per cent from the issue price of OMR0.259, in view of the expected listing gains and attractive dividend yield,” said Al Maha Research.
“We recommend ‘subscribe’ for the IPO of Dhofar Generating Company,” noted U-Capital in a research study. “The fair value of the company has turned out to be OMR0.286 per share, implying an upside of 10.4 per cent from the IPO price of OMR0.259 per share.”
DGC is offering 88,896,000 shares at a price of 259 baisas per share. At the IPO price, the company offers an average projected dividend yield of 7 per cent for the first five years, excluding issue expenses. The first dividend of 9 baisas per share is expected to be paid in February 2019, while 9 baisas per share will be paid in August 2019 with twice-yearly dividend declaration thereafter. The total dividend to be paid annually is 18 baisas per year.
The IPO will close on 30 July 2018.