Riyad Capital sets Alkhorayef Water’s IPO price range between SAR 78-82 per share

Logo of Alkhorayef Water & Power Technologies Co.

Alkhorayef Water & Power Technologies Co. (AWPT) is a growth company in a promising sector, Riyad Capital said in a new report.

The company's valuation ranges between SAR 1.952 billion and SAR 2.037 billion, based on the EV/EBITDA and discounted cash flows methods, the brokerage said, setting the IPO price range between SAR 78 and SAR 82 per share.

It further said that there is further room for AWPT to grow, especially with the upcoming projects in the sector on the back of infrastructure improvements that are attributed to different government programs.

The transmission networks sector witnessed a growth of SAR 5.4 billion in 2019, witnessing a CAGR of 74.5% from 2015 to 2019. This growth, along with the company's presence in the sectors of city water management and build, operation and transfer (BOT) market, will support diversified and stabilized long-term revenue streams. In addition, international strategic partnerships will create potential future opportunities.

AWPT has a market share of 36.1% in deep water wells and treatment plants, 8.4% in water distribution networks, 9.6% in wastewater treatment plants, 48.1% in treated sewage effluent network, and 21.1% in city management.

Riyad Capital expected AWPT's revenues to jump 45% year-on-year (YoY) in 2021, driven by new project awards, along with possible contribution to the National Transformation Program.

The company is expected to report stable growth YoY in revenues by 9%, 8% and 6% in 2022, 2023 and 2024, respectively, based on the government’s strategy to support economic diversification and development of the public services sector and the National Water Strategy 2030.

Earlier this month, AWPT announced the successful completion of the book-building process for institutional investors with the final offer price set at SAR 72 per share, with the coverage ratio amounting to 6,320% of the total offer shares, according to Argaam's data.