Alumex Limited, a 61% owned subsidiary of the Hayleys Group is issuing 59.9mn shares (of which 17.9mn will be new) to the public. The post IPO holding of the promoter will come down to 51%. The IPO will fund a powder-coating plant that would double its existing capacity. We see strong revenue growth as we expect the SL construction industry to grow alongside a shift in consumer demand to value added aluminium extrusions. Further investment catalysts include the strong forecast cash flows and the 50% tax savings the IPO will enable. We see a 13.7% upside with our DCF valuation although Alumex looks slightly expensive compared to the peer construction plays with forward PERs of 9.9x and 9.3x based on FY 2014E EPS and 2015E EPS. We recommend SUBSCRIBE.
Source: Prospectus and BRS Equity Research
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