Mubasher TV
Contact Us Advertising   العربية

MubasherTrade raises Amanat FV by 35%

MubasherTrade raises Amanat FV by 35%
MubasherTrade Reseach has raised the fair value (FV) for Amanat Holdings to AED 1.35, a 35% increase from the Company’s initial public offering (IPO) price of AED 1 per share.

Amanat Holdings sought to raise AED 1.375 billion by offering 1.375 billion shares (55% of capital) at a par value of AED 1 per share through a primary listing on the Dubai Financial Market (DFM). Subscription commenced on October 20, 2014 and will continue until November 4, 2014, with listing set for November 29, 2014. A 6.3% of available shares have been allocated to the Emirates Investment Authority (EIA).

Amanat’s founders have already subscribed to 1.125 billion shares at (45% of capital) at par. The company will use its AED 2.5 billion capital to establish and incorporate companies working in the health care and education sectors, and develop, manage and operate these companies within the GCC, especially the UAE and Saudi Arabia.

The GCC’s combined GDP reached $1.6 trillion in 2013, with GDP growth exceeding world average for the past three years. Saudi Arabia and the UAE are the two largest economies in the GCC with GDPs of $748 billion and $403 billion in 2013, respectively. Moreover, they are largest two in terms of population. According to the International Monetary Fund (IMF), 2015 GDP growth is expected at 4.5% apiece for both the UAE and Saudi Arabia, compared to 3.8% for world GDP.

Given their relatively large market sizes, existing and future supply and demand gaps, and favorable regulations, both KSA and UAE health care and education markets will be key drivers of Amanat’s business model, MubasherTrade highlighted in its report, adding that according to Amanat’s prospectus, its net profits are expected to reach AED 400 million by 2019 (a four-year CAGR of 38%) on revenues of AED 4.08 billion (a 4-year GAGR of 15%). EBITDA is projected to grow to AED 1.13 billion by 2019, implying an EBITDA margin of c.28%.

MubasherTrade has used two different valuation models to value Amanat. The first is a discounted cash flow, resulting in AED 1.73 per share and the second is a multiples valuation based on PER, EV/EBITDA, and EV/sales, resulting in an average of AED 1.64 per share.

MubasherTrade noted that it used Amanat’s own projections in reaching its valuation. “Thus, while the average of both valuation methods is AED1.68/share, we have applied an arbitrary 20% discount to account for potential execution risk. This implies a target price of AED 1.35/share, a +35% upside to the IPO price”, the research firm said.