Experts, analysts recommend subscribing to IPO of OQEP

Muscat: OQ Exploration and Production (OQEP), an affiliate of Oman Investment Authority (OIA), is offering two billion shares, accounting for 25 percent of the company's capital, through public subscription. Given the size and market value of the company, the step constitutes the largest offering in the history of the Omani capital market.

The company’s Initial Public Offering (IPO) will be floated on the Muscat Securities Market (MSX), with the prospectus also being approved by the Financial Services Authority (FSA) of Oman.

OQEP plans to offer 25 per cent total share capital, retaining 75 per cent post-offering. Shares are expected to be listed and traded on the MSX on 28 October 2024, pending market conditions and regulatory approvals.

The subscription for the two billion shares offered by OQEP commenced on September 30, 2024. The subscription period for individual investors will continue until October 9, with 800 million shares reserved for this category. Omani individuals will benefit from a maximum share price of 351 baisas, reflecting a 10 percent discount aimed at encouraging participation. For non-Omanis, the maximum share price will be 390 baisas.

Times of Oman spoke to experts and industry watchers about their recommendations about the OQEP initial public offering (IPO).

Here are some of their perspectives about the IPO:

U-Capital (Ubhar Capital)
"We recommend subscribing to the IPO of OQEP. According to our estimate, the fair value of the company is OMR0.442 per share, implying an upside of 13%–19% to the Category I IPO offer price of OMR 0.370–0.390/share and a 26% upside on the Category II offer price for Omani citizens."

Vision Capital
"We recommend subscribing to the IPO. Our valuation indicates a fair value per share of OMR 0.458, which translates to a FY2025 PE of 11.5x, 2025 EV/EBITDA of 6.1x, and a 12-month dividend yield (inclusive of performance dividend) of 8.6%. Our fair value indicates an upside of 23.8% to the lower end (OMR 0.370) and 17.4% to the upper end (OMR 0.390) of the price band for Category I investors, and an upside of 30.5% for Category II investors (local investors)."

Ahli Bank
"We initiate OQ Exploration and Production (OQEP) with a target price (TP) range of OMR 0.424 to OMR 0.450, implying an upside of 15.3% at the high end of the IPO price range. We believe the stock is attractive due to the portfolio of highly valuable production assets and the low operating cost (OPEX) per barrel, allowing the company to produce returns despite oil and gas price fluctuations."

Individual investors require an active Investor Account issued by Muscat Clearing & Depository (MCD). Investors can create an Investor Account through the MCD website www.mcd.om or download the Oman Stocks App. They can alternatively visit their nearest bank branch for more details.