The Egyptian stock exchange (EGX) will list MM Group for Industry and International Trade on Sunday, marking the first initial public offering (IPO) in 2017.
The MM Group’s offering aims to collect EGP 720m on 2 April, equivalent to 30% of the share capital, amid expectations of high demand on the IPO, due to the low price of shares.
According to the fair value of MM Group’s shares, the estimated total net profit this year would reach EGP 258.46m, with a price of EGP 0.65 per share. The price-to-earnings will increase about 9.3 times, as the maximum price set is EGP 6.06 per share.
The EGX has opened the door for receiving purchasing requests of MM Group’s shares, scheduled from 2 to 6 April. The offering price will be determined based on the order book building mechanism in the special offering, while the final price will be announced on 4 April.
The general portion of the IPO represents 15% of the total offering and 4.5% of the total shares of the company, while the special portion of the IPO represents 85% of the total offering and about 25.5% of the total shares of the company.
The prospectus of MM Group revealed that the EGX has allocated EGP 108m from the proceeds of the company’s offering on the stock market to finance the stock stability account for a period of 30 days since the start of trading. The stock stability account is limited to subscribers in the general portion of the IPO, representing about 4.5% of MM Group’s shares. The purchase price is set at the offering price and the account to be opened in the Arab African Bank (AAB).
The EGX has warned brokerage firms to finance the IPO of MM Group through indebted financial centres, because this stock is not listed among the shares lists of specialised activities.
The fair value report of the MM Group’s share said that the company achieved sales up to EGP 4.66bn in 2016. It also expected to achieve a growth of 25% during this year, to reach EGP 5.8bn, with expectations to reach EGP 6.89bn in 2018.
The report predicted that the company would achieve net profit up to EGP 300.1m in 2017, compared to EGP 258.5m in 2016, with a growth of 16%, while the estimated profits will reach EGP 356.7m in 2018.
The sales of Samsung represent 60% of the company’s revenues, equivalent to EGP 2.79bn, with expectations to reach EGP 3.767bn this year, recording 65% of the company’s estimated sales in 2017.
The fair value report, carried out by BDO Egypt, predicted sales of EGP 1.7bn this year from Vodafone activities, equivalent to 29.3% of the estimated revenue for 2017.
According to the report, the estimated total net profit of this year will reach EGP 258.46m with EGP 0.65 per share, as the maximum price set is at EGP 6.06 per share.