Analysts recommend ‘subscribe’ for DGC’s reduced IPO price offer

MUSCAT, AUG 12 – Research analysts have provided strong recommendations to subscribe to the IPO of Dhofar Generating Company (DGC) SAOG (Under Transformation). The IPO of the company has been extended till August 16, 2018, with a reduced price of 225 baisas per share (including issue expenses) translating to a higher dividend yield of 8 per cent for the first five years. “We value DGC at RO 0.294 per share with a long term perspective and recommend investors to ‘Subscribe’ to the offer in view of the upside potential of 30.7 per cent from the revised issue price of RO 0.225 in the next nine to twelve months, along with the expected listing gains and the attractive dividend yield of 8 per cent at the offer price,” Al Maha Research said.
U-Capital added: “We reiterate our positive stance on the IPO of DGC. At the new offer price, price to book multiple is 1.0x and offers a dividend yield of 8 per cent which is way above the average yield of the power and water sector and MSM with a potential upside of 27 per cent.” Gulf Baader Capital Markets (GBCM) stated: “Historically, the utility sector IPO saw strong listing gains in MSM and had adjusted for 6‐6.5 per cent dividend yield immediately post listing. With DGC offering a dividend yield of 8 per cent on the revised IPO pricing, we recommend both long- and short-term investors to subscribe for the issuance. We maintain our long-term fair value of DGC at RO 0.274, offering an upside of 21.8 per cent from the revised offer price.”
In order to encourage enhanced retail participation, active trading in the shares of DGC on listing and long-term commitment to Oman, DGC decided to offer more value to investors participating in its IPO and revising the price to 225 baisas per offer share on the entire offering of 88,896,000 shares.
Naif al Awaaid, CEO of DGC, said: “Our decision to offer more value to investors in Oman has been received well by the investor community. Analyst reports further reinforce the investment opportunity, especially with the new reduced price that offers significantly more value to investors. We urge all investor groups to take advantage of the reduced price and the extended subscription period. DGC is Dhofar’s largest power company and is an essential part of the growth and prosperity in the region, and the IPO is a unique opportunity to be part of our remarkable success.”