Pakistan Aluminium Beverage Cans Ltd (PABC) held an analyst briefing session ahead of IPO, where the management discussed key highlights of the financial results and outlook of the company.
• PABC is the sole supplier of aluminum beverage cans in Pakistan with an annual capacity of 700mn cans per annum. The management highlights the utilization level is expected to reach 96% in CY21. To capitalize on the growing demand locally and export opportunities, the company is in expansion phase to increase its current capacity of 700mn to 950mn cans per annum.
• The estimated CAPEX for the aforementioned project is ~USD 80mn and is being financed through the SBP LTFF facility at a rate of 3%. The company has opened LCs worth USD 6.9mn and is in process of opening the remaining LCs. The expected COD of plant expansion is Jul’22.
• The major chunk of local sales comes from Pepsi Co which is approx. 57%, while coke’s contribution is 32%. The company managed to sell 200mn cans in 4MCY21 which is half of CY20’s volume. During 4MCY21, the bottom line of the company clocked in at PKR 596mn (EPS: PKR 1.65) which is close to CY20 PAT of PKR 610mn (EPS: PKR 1.69).
The surge is mainly attributed to operational efficiencies.
• The raw material used in can manufacturing is aluminum coils which constitute 60- 65% of production cost and the price is indexed to LME. To highlight, PABC’s product is being offered at ~15% lower than the landed price of imported cans.
• The company has a strong footprint and over 50% share of aluminum beverage cans in Afghanistan. PABC has recently signed an agreement with leading beverage players in the USA, while also exploring other export opportunities in Central Asian Countries.
• Due to environmental concerns, conversion from plastic to cans is underway as beverage producers PepsiCo and Coca-Cola are launching their flagship water brand in aluminum cans.
• As per management, the current can penetration in Pakistan is 3.6%, which is expected to reach 5-6% by 2025. This increase can deliver 5-year CAGR of 19%.
Courtesy – Spectrum Securities Limited