Muscat - Al Maha Ceramics, which launched its RO7.94mn initial public offering (IPO) on September 16, has projected an average dividend yield of 8.8 per cent per annum for the next five years.
The company's IPO, which is open to individual investors and mutual funds registered with CMA, will close on October 15. The shares are expected to list on the Muscat Securities Market (MSM) on November 3.
At a press conference on Monday, officials of the company and the issue manager said Al Maha Ceramics has estimated dividend payment at a rate of 35 per cent (or 35bz per share) for the period 2014-18, with the first dividend for 2014 to be paid in 2015.
The company is offering 20mn ordinary shares in the IPO at 397bz per share (comprising a nominal value of 100bz, a premium of 295bz and offer expense of 2bz).
Arvind Bindra, CEO Al Maha Ceramics, said, "We have a proven track record in the business with fusion of world-class technology and best business practices. We have been operating above our rated capacity and we believe that the market outlook for the ceramic tiles sector will continue to be strong. We expect to maintain and grow our performance."
Al Maha Ceramics achieved total revenue of RO9.77mn in 2013. The company has projected revenues of RO10.78mn in 2014 and RO11.4mn in 2015. Profit before tax is estimated at RO2.64mn and RO2.82mn for 2014 and 2015, respectively.
Lo'ai Badie Bataineh, head of the investment management group of Oman Arab Bank, the issue manager and financial adviser for the IPO said, "The company has grown steadily over the years and has an established history of profits and dividends, which lays the foundation for the IPO."
On the company's future plans, Bindra said Al Maha plans to move towards digital printing technology for its production and will carry out modifications to improve production output marginally and enhance operational efficiency.
Al Maha plans to add two more production lines with a capacity of 3.5mn sq m of tiles per line. Bindra, however, said that this is subject to additional allocation of natural gas from the government or the company installing a synthetic gas plant. Al Maha Ceramics currently has the capacity to produce 6mn sq m of ceramic tiles per annum.
According to the IPO prospectus, Al Maha has contracted with Innovative Energy Systems LLC for the supply and installation of a synthetic natural gas (SNG) plant to supplement its supplies of natural gas. The plant is expected to cost approximately RO350,000 and be commissioned by October 2014.
© Muscat Daily 2014
