Published: Jun 23, 2014
Source: Muscat Daily

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Power Firms' Shares Up 25% on Market Debut

Shares of Al Batinah Power and Al Suwadi Power rose nearly 25 per cent in their trading debut on Monday, underscoring the ­popularity and strong investor appetite for power sector initial public offerings (IPOs) in the ­sultanate.

The shares of Al Batinah Power jumped 25.78 per cent above their IPO price in their stock-market debut, while the shares of Al Suwadi Power rose 24.61 per cent above their offer price, as investors bet on the stable business outlook and attractive dividends yields of power companies.

Al Batinah Power's shares closed at 161bz on Sunday, against the offer price of 128bz, while Al Suwadi Power shares closed at 162bz, against the offer price of 130bz. The two stocks also posted huge volumes in their trading debut on the Muscat Securities Market (MSM).

“Trading volumes were huge. Since institutions received less allotment of shares in these ­offerings, there was a huge ­buying appetite on listing from local institutional investors who view these stocks as good long-term bets,” said Alaa el-Din Moustafa, general manager at EFG-Hermes.

He said that selling on the first day of trading was mostly by retail investors who were looking for listing gains.

“There are lots of buyers, as power-sector stocks in Oman are always considered good. We are expecting to see good volumes and movement in the prices of shares for the next two days. The only problem is that the other regional markets are falling this time. However, the MSM is generally stable,” Moustafa added.

The shares of both companies will be on free float until June 25

More than 68mn shares of Al Batinah Power were traded over a total of 6,551 trades, while Al Suwadi Power saw volumes of 79.4mn shares on a total of 6,841 trades.

Przemek Lupa, chief executive officer of Al Suwadi Power, said, “If you look at the consensus of analysts, their average target price for both IPOs was around 155bz. So the market price has been in line with analysts' consensus and this is probably a fair pricing.

“People are interested in Oman's power sector because of the stable business model and predictable cash flows. If you look at the declaration of dividends in the IPO prospectuses, we tend to keep our promises to the market. The first dividend has already been announced,” Lupa added.

Last week, the boards of both Al Batinah Power and Al Suwadi Power announced interim cash dividends of 1.5 per cent, or 1.5bz per share, for shareholders of the ­companies who are registered in the companies' shareholders' register with the Muscat Clearing and Depository Co (MCDC) as on June 25. By Gulam Ali Khan

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