Lalpir Power: Market depth to digest OFS looks strong

We expect favorable investor appetite for upcoming listing of Lalpir Power where a high payout policy translating into prospective D/Y of 18-20% (at the floor price) barring a dip in 2014E, should be the key selling point.

From a total offer of 37.9mn shares, 28.5mn shares are targeted to HNWI’s via book building process and the remainder (9.5mn shares) for public subscription.

Key investment considerations show fuel losses (10-12gms/kWh) as the prime irritant, even as the company aims to mitigate these through efficiency upgrade projects. Cumulatively these measures are expected to allow Lalpir to save ~4.7gms/kWh and push thermal efficiency to ~37.5% by 2015E.

Sensitivities suggest 4-6% EPS upside from incremental 1% deval in PkR/US$ parity while exposure to inter-corporate debt is nominally negative for earnings. 

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Via: KASB Securities and Economics Research   

Lalpir Power Book Building And Innitial Public Offer For Sales Of Shares

ADVICE FOR INVESTORS

INVESTORS ARE STRONGLY ADVISED IN THEIR OWN INTEREST TO CAREFULLY READ THE CONTENTS OF THIS OFFER FOR SALE DOCUMENT, ESPECIALLY THE RISK FACTORS GIVEN AT PARA 5.7 BEFORE MAKING ANY INVESTMENT DECISION.

SUBMISSION OF FICTITIOUS AND MULTIPLE APPLICATIONS (MORE THAN ONE APPLICATIONS BY SAME PERSON) IS PROHIBITED AND SUCH APPLICATION MONEY IS LIABLE TO CONFISCATION UNDER SECTION 18A OF THE SECURITIES AND EXCHANGE ORDINANCE, 1969.