The Parkin Co. experienced strong interest on the first day of its IPO, reminiscent of the oversubscription craze seen with previous offerings like Dubai Taxi IPO, which turned in more than 135 times.
Bookings for Parkin Co., which aims to raise up to Dh1.57 billion, were filled within minutes of opening last Tuesday, according to Bloomberg. The final price will be announced on March 14, with trading expected to commence March 21. Given the demand in the last two days and still a lot of time left for the subscription, a 100 times plus oversubscription will not be out of the reach.
Investor appetite for UAE-based companies remains robust, fueled by the growth prospects and economic fundamentals. Parkin anticipates significant revenue growth, driven by demand for parking spaces in Dubai amid its expanding economic activity and population.
The company foresees a 60 per cent surge in public parking demand by 2033, supported by the influx of expats attracted by favorable reforms and job opportunities. Parkin plans to distribute dividends equivalent to 100 per cent of profit - or free cash flow to equity - for 2024 fiscal year, prioritizing the higher of the two.
Subscribers in the first tranche are guaranteed a minimum allocation of up to 2,000 shares - subject to availability.
The Dubai Investment Fund, the selling entity, retains the right to adjust the offering size before the subscription period ends. Additionally, 5 per cent is reserved for the Emirates Investment Authority and the Pensions and Social Security Fund of Local Military Personnel.
In 2023, Parkin reported impressive revenues of Dh779 million, a 13 per cent increase from the previous year - and a remarkable 31 per cent surge from 2021. The profit of Dh394 million reflect a 25 per cent rise from 2022 and a substantial 79 per cent from 2021.
Valuation analysis
Parkin's financial metrics depict a compelling investment opportunity. The consistent growth trajectory suggests that its current implied price range is discounted by approximately 15 per cent, making it an attractive proposition.
Parkin's IPO introduces a dividend strategy designed to prioritize investor returns. Investors can anticipate a dividend yield of 5.5-6.5 per cent based on the profits from last year. These dividend yields notably surpass those commonly observed in other emerging global markets.
A discounted valuation not only enhances the attractiveness of Parkin's shares but fosters increased investor support for the IPO. By setting a discounted valuation, Parkin aims to broaden investor base and bolster participation from retail and institutional investors.
Parkin's IPO represents a significant milestone for the company as it seeks to leverage its dominant position in Dubai's parking market to drive sustained growth and shareholder value. With a compelling financial performance and discounted valuation, Parkin is poised to attract considerable investor attention and emerge as a formidable player in the DFM.
