Highest Competition Rate 3039 to 1... Domestic IPO Market Storm

Focus on Growth Potential with Attention to Secondary Battery and Bio Companies
Companies Holding Shares in Firms Scheduled for IPO Also Gain Spotlight

[Asia Economy Reporters Bomryeong Kim, Minwoo Lee] Since the second half of the year, the competition rate for general subscription of public offering stocks has been continuously breaking records, signaling a boom in the initial public offering (IPO) market. In particular, companies in sectors such as secondary batteries and bio, which have growth potential, are continuing to achieve 'IPO jackpots.' Along with this, companies holding shares in firms scheduled for listing are also gaining attention.

As of the 7th, the competition rate for general subscription in the IPO market is rewriting history. Iruda, which was listed on the KOSDAQ market the previous day, recorded an all-time high competition rate of 3039.56 to 1. Yeonglimwon Soft Lab, scheduled to be listed on the 12th, showed a rate of 2493.57 to 1, and Korea Pharma, listing on the 10th, exceeded 2000 to 1 with a rate of 2035.74 to 1.

These companies share several commonalities. First, they are related to the secondary battery sector, which is gaining momentum with the rise of electric vehicles. A-Pro, TSI, and E&Di are included here. In particular, A-Pro, a company specializing in activation process equipment for secondary batteries, has about 95% of its major customers as LG Chem. Therefore, if LG Chem's electric vehicle battery production capacity (capa) expands, direct benefits are expected.

The pharmaceutical and bio sectors, which have attracted more interest since the outbreak of COVID-19, are also drawing attention. SK Biopharm, which successfully completed its listing on the 2nd of last month, is a representative example. Approximately 31 trillion won in subscription deposits poured into SK Biopharm, opening the door to the IPO market boom. Other companies include Korea Pharma, Genolution, and Withus Pharm.

Although not major sectors, companies with high growth potential in the future have also been chosen by investors. Iruda, which develops beauty medical devices, is expected to drive performance growth with the release of its vascular salvage laser surgery (VSLS) equipment scheduled for the first half of next year. Yeonglimwon Soft Lab, a developer and seller of enterprise resource planning (ERP) platforms, is gaining popularity due to growth expectations in the cloud and smart factory sectors.

An IR company official explained, "Public offering stocks tend to follow trends and industry issues, so IPO companies based on these often receive high valuations. While the quality will be distinguished based on specific figures and business status, recently investors have been flocking to bio and secondary battery sectors."

With the public offering stock fever, companies holding shares in firms scheduled for listing are also attracting interest. Netmarble recorded its highest price of the year at 140,000 won the previous day. This is interpreted as reflecting expectations as the listing of Kakao Games, in which it holds a 5.8% stake, is becoming visible next month. There is more good news. Big Hit Entertainment, in which Netmarble holds a 25% stake, is also pursuing a listing. Since Big Hit's corporate value is expected to reach up to 4 trillion won, Netmarble's stake is projected to be worth about 1 trillion won.

SK Innovation's stock price also surged. It recorded a yearly high of 171,000 won early in the trading session. It has risen continuously over the past four trading days, increasing about 32% compared to the closing price of 129,500 won on the 3rd. Expectations for the battery business, considered a future growth engine, seem to be the main factor. In particular, attention is focused on SK IE Technology (IET), which recently entered the IPO process. Established last year as a 100% subsidiary through a spin-off of SK Innovation's battery separator business division, it is evaluated to have world-class battery separator technology.

SK Bioscience, which officially announced its listing next year, and DoubleDown Interactive (DDI), an online social casino company pursuing a listing on the U.S. Nasdaq, are also companies to watch. Their parent companies are SK Chemicals and domestic social casino company W Games, respectively. Shin Seungjin, a researcher at Samsung Securities, said, "Investment methods for companies scheduled for IPO include direct purchase of over-the-counter stocks, but investing in the parent companies holding shares in IPO firms is a more realistic alternative."