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Octopus Digital Pre IPO Book Building Monday, 30 August 2021

First AI company listing in Pakistan
Octopus Digital announced that it is offering Octopus IPO details
27,350,000 ordinary shares which constitutes 20% Open date 09-Sep-21
of the total post-IPO paid up capital of the Lot Size (ordinary shares) 27,350,000
company. Issue Price PKR 29/sh
Price Band (Maximum 40%) PKR 40.6/sh
20,512,500 shares will be offered to pre- Minimum Bid size PKR 1,000,000/-
IPO investors from Sept 9th till close on Bidding Period Thursday & Friday
Sept 10th.
9:00 a.m.to 5:00p.m.
The floor price of PKR 29/sh (including a
Closing Date 10-Sep-21
premium of PKR 19/sh) with a maximum
Banker to Book bulding Meezan Bank Limited
price band of up to 40% above floor
Public Subscription September 16 & 17-2021
price i.e. Rs40.6/sh.
Listing at PSX
Meezan Bank (MEBL) is banker to book
Source Company's prospectus
running process.
We advise investors to Subscribe IPO till cap price Pre Issue Post Issue
Sponsors
of PKR 40.6/sh. Shareholding Shareholding
Octopus Digital is 100% subsidiary of Avanceon Avanceon Limited 99.99% 80%
(AVN). AVN is giving its 20% stakes of Octopus to Source: Company's prospectus

general public. Source of Funds

Octopus is into ‘360 degree digital transformation Amount (PKR Mn) %
& continuous upgradation’ is stating to expand IPO 793 100
operations to bring 4.0 industrial revolution in Utilization of Funds
Amount (PKR Mn) %
Pakistan; specifically in the areas of IoT, AI, cloud
Intellectual Property 696 88%
computing, big data, fintech and robotics. HR cost of Marekting 42 5%
Investors perception is building around Artificial HR cost of Sales 55 7%
Intelligence (AI) – which should be one of the core Total 793 100%
functions of Octopus Digital. Source: Company's prospectus

AVN itself is a technological transformation

provider has formed Octopus in 2017. Maintenance Contract Summary

System Improvement Services

Currently Octopus is providing AMS services to
After-Market Support

wide range of clients both locally and Call out Services

internationally. AVN transferred its AMS (after Time sheets & Feedback

sales services) business to Octopus in 2020 which Technical Trainings

constitute around 71% in total group revenue (PKR Modernisation & Upgrades
6.4bn in CY20).
Augmented &Virtual Reality power

Top ware Digitalisation, dashboard

Predictive & Prescriptive

Source: Company's Prospectus

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Octopus Business Plan

Intangible Assets Amount PKR Mn
Octopus provides digital transformation via
Customer contracts 75.88
subscription model from which all the
General SOPs, Manuals. 32.52
intelligence insights, analytics, prediction &
prescription is delivered as a service. To secure Customer and subscriber 54.2
data Octopus has partnered with Microsoft Corp Specific Database, Technology 271
Inc to use Azure cloud platform globally, namely Goodwill 650.4
“Topware” – which is Octopus open source Total 1,084
Digitalization services suite; Source Company's prospectus
• “Connected Enterprise” by integrating all-
intended plant, oil terminal, assets through
IoT technologies & collecting their data
centrally
• “Digital Enterprise” by setting up a digital 71% 63%
Avn
twin through visually appealing dashboards AMS Revenue Market share
accessible on the cloud
• “Optimized Enterprise” by providing
decision-support via actionable intelligence
through collaborative handholding by Source: Company's Prospectus

process and data experts

Customers Elegencia
Hospitality &
Octopus Model of Octopus
7% Facilities
Octopus model is based perpetual or term-based Management
Services Co W.L.L
multi-year monthly subscription service which 15%

reduces risk of volatile earnings. While AMS is

Engro
Octopus existing revenue stream. Polymer &
Chemicals
Key Customers Limited
6%

Pakistan
Petroleum
Others Limited
36% 15%
PEPSI-COLA
SERCO Limited International Private
11% Limited
10%

Source: Company's Prospectus

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IPO Proceeds
Octopus requires funding of PKR 793.15mn to develop Digital dashboard platform.
Entire requirement funded through IPO.
Utilization of Funds Source of Funds
Categories Amount in PKR % Categories Amount (PKR) %
Intellectual Property 696,000,000 88% Initial Public Offering 793,150,000 100%
HR Cost of Marketing 42,150,000 5% 0%
HR Cost of Sales 55,000,000 7% 0%
Total 793,150,000 100% Total 793,150,000 100%
Source company's prospectus

Octopus financial performance

In PKR "000" 2018 2019 2020
Share capital - 10,000 1,094,000
Octopus projects a growth
Net worth 509 11,940 1,304,581
story since its inception,
Revenue - 18,456 277,114
moreover the Company plans
Gross Margin % 0 100% 92% to develop various Digital
Operating Margin % 0 25% 86% Dashboard platforms to
Profit after tax (509) 2,449 208,641 expand its services suite to
Profit after tax margin % 0 13% 75% industry 4.0. These services
EPS (PKR) (5.09) 2.45 1.91 will be marketed in Pakistan,
Breakup value per share (PKR) (5.09) 11.94 11.92 Middle East and US.
Total Borrowings as per balancesheet - - -
Cash flow from operations (435) (6,239) 20,403
Source company's prospectus

At present, Octopus has dozens of AMS contracts with an average tenure of 5+ years, and
it caters to clients based in Middle East and Pakistan. The majority of these are those
contracts that were transferred from Avanceon to Octopus.
PKR Pakistan Dubai Qatar Total
Amount % Amount % Amount % Amount %
Total AMS
segment
187,055,350 36% 241,314,072 47% 84,855,237 17% 513,224,659 100%
Revenue
of AVN
Cost (84,304,042) 44% (82,342,830) 43% (27,007,432) 14% (193,654,304) 38%
Gross profit 102,751,308 32% 158,971,242 50% 57,847,805 18% 319,570,355 62%
Source company's prospectus www.scstrade.com
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Industry 4.0 revolution describes the exponential changes to

the way we live, work and relate to one and other due to
adoption of cyber-physical system, the internet of things and
the internet of system
WORLD ECONOMIC FORUM

Industry 4.0 is a hyper connectivity-based intelligent technology

revolution triggered by the development of artificial
intelligence, big data, and other digital technologies that is
expected to give rise to innovative transformations in not only
industries but also the national system, society, and people's
everyday lives.
MINISTRY OF SCIENCE AND ICT, SOUTH KOREA

The Industrial revolutions

INDUSTRY 4.0
Cyber-physical
systems, networks, IoT,
big data, cloud,
artificial intelligence
INDUSTRY 2.0 INDUSTRY 3.0 and augmented reality
Electrically Use of electronics
powered mass and computers to Industry 4.0 will have a
INDUSTRY 1.0 production; achieve further much bigger impact on
Mechanisation, assembly line automation of wider society – beyond
water and steam- based on division manufacturing the industrial sector –
powered than previous
of labour
production industrial revolutions

End of 18th Start of 20th

century century 1970s Today

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Potential services offered by Octopus Digital

Technical Chores Handling Data Gathering, cleaning

From Technology standpoint: & compiling
Information & insights through To integrate different sets
subscription-based digitalizes of data from various
service “Topware”
C D systems connecting to its
platforms.

Business-Focus is a Top Automate Task and

Priority improve Processes.
From business standpoint: Generate analysis for
enable customer to work B E predictive & prescriptive
remotely and be informed measure.
about plant performance and
KPIs

Financial Planning Gets

Technical Chores. Handling
Better A
F Keeps data secure and
From Accounting standpoint;
accountable to all users
customers can eliminate the
capital expense incurred for a
new software.

Iqra Nadeem
Research Analyst
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