Macro Pharma has priced its initial public offering (IPO) on the Egyptian Exchange (EGX) at EGP 5.30-6.15/share. The transaction will see 45.8%, or 264.5 million shares, offered in a secondary sale that will consist of 251.28 million shares for qualified institutional investors in several countries, including Egypt. It will also consist of 13.22 million shares to retail investors in Egypt. The indicative pre-offering price range values the company at EGP3.06-3.55bn. Currently, Macro Pharma is kicking off the book-building process, and will set a final offer price on or around 11 April. The subscription period for the retail portion of the offering is expected to run from 8-14 April, with trading scheduled to begin around 19 April. The company was established in 2005, and had achieved a market share of 23.1% in 2020. Macro is in principle engaged in the manufacture and sale of cosmetics and, to a lesser extent, nutraceutical products. Macro manufactures 124 cosmeceutical products across seven therapeutic areas, and one nutraceutical. It has 79 additional products across a variety of high-growth, high-margin therapeutic areas in the two segments, which are expected to be launched between the first quarter (Q1) of 2021 and Q2 of 2023. The majority of Macro Group's diverse portfolio of 125 SKUs as of 31 December 2020 is manufactured in-house at its production facility in Badr City. The company utilises a defensive prescription-based sales strategy, and generates demand through an incentivised medical sales force of over 550 employees that targets physicians and pharmacies nationwide. Under this system, 85% of sales are estimated to be initially generated via prescription at the physician level, underlining the defensive demand-profile of Macro Group's business. Macro reported revenues of EGP 430.5m in 2020, with a 2018-20 CAGR of 34%. Meanwhile, EBITDA recorded EGP 186.5m in 2020, with a 2018-20 CAGR of 92%, implying a margin of 43.3%. Bottom line came in at EGP 135.1m in 2020, with a 2018-20 CAGR of 98%, implying a net profit margin of around 31.3%. Pharos Research said that assuming a 2021 revenue growth of 30.0% and NPM of 32.0%, the implied 2021 P/E valuation range would come in at 17.1-19.8x, respectively. This comes slightly higher than RMDA's 2021 trading P/E multiple of 15.7x, but at a significant premium to PHAR, AXPH, CPCI, and ADCI, whose 2021 P/E stands at 7.6x, 5.0x, 6.5x, and 5.7x, respectively. PHAR approved 2020 dividends distribution of EGP 3.00/share (EGP 292.7m), which implies a pay-out ratio of 60% and DY of 6.8%, respectively.
