Avanceon Limited (AVN) – A leading provider of industrial automation services in Pakistan and the Middle East. Over the past five years, AVN’s revenue / earnings has been CAGR32 / 34, where penetration in the major ME region has been a key part of growth (c.70 exports of AVN’s total revenue). Is).
Experts expect AVN to maintain this momentum in both Pakistan and ME’s industries in view of the rapidly growing focus on automation, process control and productivity improvement. AVN’s next major source of growth is its subsidiary, Octopus Digital Limited (our TP’s c.22), which ranges from later market maintenance solutions (AVN clients) to new product launches. Spreading, including panel software. From plants etc.) in meaningful input for decision making for their clients.
AVN has a lot more to offer
Most of the ME economies that AVN serves are set for a rebound. International oil prices (up c.6xt from the Covid-low in 2020) will help AVN to gain more contracts in Saudi Arabia and UAE, where Oil & Gas clients dominate business for AVN. Saudi revenues nosedived by 69% yoy in CY20 following the oil price crash in 2020 (largest customer was Saudi Aramco), but this was offset by a big jump in Qatar revenues. We expect that Saudi business will be reinvigorated by oil prices sustaining US$70/bbl and its plans to diversify its economy away from crude oil.
Revenues in Qatar have nearly doubled in the past two years, thanks in part to preparations for the FIFA World Cup 2022. But AVN is also attracting substantial infrastructural projects in Qatar (more diversified than Saudi), where AVN has set up its own office (otherwise third-party used to attract clients). Thus Qatar revenues are likely to remain strong beyond 2022, in our view.