Most successful IPO in recent times Ex-pack to trade today

The most successful IPO in recent times, Ex-pack Corrugated Cartons Ltd., will see the debut trading of its shares on the Colombo Stock Exchange (CSE) today.

Classified under ‘Materials industry’ group, Ex-pack (PACK), which is a leader in corrugated carton business comes to the market at a time when retail investors have been chasing away illiquid stocks on speculation and target price scenarios sans fundamentals. 

The Rs. 700 million Ex-pack IPO saw a massive demand of Rs. 8 billion via over 6,000 applications.

Following high subscription, the PACK board decided to allot in full for three categories of applicants – Retail Individual Investors, Unit Trusts and Group Employees and Directors.

To others the basis of allotment was: All other investors who applied beyond 11,900 shares: allotted 11,900 shares and 1.107339% of any shares applied over and above the said 11,900 shares. No preferential allotment was made to the Non-Retail category.

The Ex-pack Group achieved a topline revenue of Rs. 3.465 billion in 1H of FY22, against Rs. 2 billion a year ago, recording a 59% increase. This was achieved amidst a subdued environment for manufacturing during April and May. Company turnover grew to Rs. 2.319 billion, against Rs. 1.460 billion the previous year. 

In terms of manufacturing volumes, Ex-pack has achieved YOY growth of 17.4% during the first half, which is 7.7% above forecasts. The company’s subsidiary, Neptune Papers Ltd., also posted volume growth of 13% for the same period under review. Based on the first half results, Ex-pack is on track to exceed its forecasted revenue of Rs. 5.865 billion for the year. 

During the first half of the year, PAT stood at Rs. 200 million, against just 45 million during the same period in the previous year, during which, performance was heavily impacted by the global pandemic. Earnings Per Share (EPS) for the first half stood at Rs. 0.80.

Ex-pack Corrugated Cartons offered 83.3 million ordinary voting shares (a 25% stake) at a price of Rs. 8.40 per share through its IPO, resulting in a projected market capitalisation of Rs. 2.8 billion. This translates into an estimated forward PER of 7.7x for FY22 and implied TTM PER (as of August 2021) of 8.9x. 

Funds raised by the IPO will go towards a Rs. 3 billion ultramodern production facility, which is expected to raise monthly volumes from 2,650 metric tons, currently, to 4,000 metric tons by 2025. Ex-pack serves top corporate customers and brands worldwide, across a range of industries, including FMCG, consumer durables, apparel, tea and fisheries. The company’s international presence extends to eight key markets, including the Maldives, Qatar, India, USA, Australia, Madagascar, the Seychelles and Reunion Island.