Initial Public Offering: Mailpac Group

The Mailpac Group is a recently incorporated company that acquired the businesses of Mailpac Services Limited and Mailpac Local Limited. Mailpac Services Limited was formed in 1998 as the first international agent to Metropolitan International Services (Aeropost). The idea behind Mailpac Services Limited was to provide an address in the United States where online shoppers in Jamaica could send their purchases to make the process of receiving their items more seamless.

Company Overview

After seven years of expanding Mailpac through various infrastructural and technological enhancements, Norbrook leveraged its e-commerce expertise to establish Mailpac Local Limited – a separate e-commerce business serving local retailers that wanted to sell to Jamaican consumers. The company built its customer base by delivering goods bought on its website from local providers such as PriceSmart, Hi-Lo and Stationary Centre. After significant development across both platforms and over $263M of investments in infrastructure, technology and service offerings of the acquired businesses, Norbrook has decided to better position both companies by restructuring them as one newly formed entity – Mailpac Group Limited. This decision was bolstered by the significant growth both companies were experiencing and the expectation that an e-commerce explosion was imminent.

The Company offers e-commerce fulfilment services from the United States to Jamaica (under the brand Mailpac Services), cross-border online shopping with local landed prices (Mailpac Marketplace), local online shopping and delivery from local retailers (Mailpac Local), online shopping financing (Mailpac Financial Services), a branded MasterCard for shopping online (The Mailpac Card), sea freight shipping (Mailpac Ocean Freight) and brokerage services.

Analyst’s Opinion

The current industry landscape within Jamaica is a competitive one, with many competitors offering similar services. The Mailpac Group stands out as one with a relatively long history in Jamaica, operating for over twenty (20) years in satisfying the e-commerce needs of everyday Jamaicans. We positively view the many competitive advantages of the Group to position itself as a potential market leader. The group’s strong technological base easily places it with its major competitors, in many cases
offering services that aren’t offered by the lot. Mailpac’s intended use of the IPO proceeds to reduce existing debt is expected to strengthen its position for further growth. With the final quarter of the calendar year including Black Friday, Cyber Monday and the Christmas season, we anticipate a strong
performance from Mailpac as online purchases tend to be high during this part of the year.

Additionally, the group’s IPO price of J$1 per share, presents an attractive price earnings (P/E) to investors. Accordingly, we (Ideal) are recommending a BUY.

Read full analysis here.