[Post-IPO] Abko, Delay in Smart School Project

[Asia Economy Reporter Jang Hyowon] ABKO, a computer peripheral sales company, is facing a crisis with its "Smart School" business, which was presented as a new growth engine at the time of its listing last year. The "5th Smart Device Introduction Pilot Project," which was announced as confirmed for delivery, was also canceled, and it has been confirmed that the company did not win any projects in bids held by local education offices this year.

According to the financial investment industry on the 31st, the Ministry of Education's "2020 School Smart Device Introduction Pilot Project (5th)" was completely canceled at the end of last year. The 5th smart device introduction project was a government procurement project worth 44.6 billion KRW to supply tablet PCs to elementary and middle schools.

This project became problematic during the October national audit last year because Chinese OEM (Original Equipment Manufacturer) products, which had never been sold domestically or internationally, were to be supplied. As a result, the Korea Information Society Agency (NIA), the dedicated agency for the smart device support project, suspended the project at the end of December last year.

Abko's PADBANK smart charging locker.
Photo by Abko website capture

ABKO was scheduled to deliver its own brand smart device charging cabinets (PADBANK) to schools together with the company that won the 5th project. PADBANK is a device that can charge a large number of tablet PCs simultaneously. However, with the suspension of the 5th project, ABKO's delivery plans were all canceled.

The government's 5th school smart device introduction pilot project was one of the key new growth engines proposed by ABKO. Until 2019, ABKO was a company with about 95% of its business focused on gaming gear such as keyboards, but from last year, it began to increase the proportion of smart device charging cabinets and small home appliances businesses.

At the time of its listing on the KOSDAQ market on December 2 last year, ABKO announced through investor relations (IR) that the 5th smart device introduction project contract was confirmed and planned to deliver a total of 3,681 charging cabinets. The expected sales amount was about 3.5 billion KRW.

ABKO also promoted that the expected market size for smart device charging cabinets in 2025 would be between 300 billion and 500 billion KRW, and that ABKO's PADBANK had an overwhelming possibility of winning government contracts. They also drew a blueprint to expand into Japan, Vietnam, Europe, and other regions based on government project experience.

Furthermore, ABKO expected that Smart School sales would account for about 10-12% of total sales annually. Assuming last year's sales of about 153.2 billion KRW continue this year and next year, it was expected that about 15 to 18 billion KRW in sales would be generated from Smart School.

Based on these projections, ABKO's public offering price was set at the top of the desired range at 24,300 KRW, raising a total of 60.9 billion KRW.

However, as of the end of the first quarter, ABKO has not won any additional bids for smart device charging cabinets. Apart from the 5th school smart device introduction pilot project, no sales have occurred in Smart School projects conducted by local education offices.

Regarding this, an ABKO official stated, "We did not participate in the recent local education office smart device project bids because the product performance and price did not meet requirements, but this project will continue steadily," adding, "Currently, this project does not account for a large portion of sales, so it will not have a significant impact on performance."