[Click eStock] "Hancom, Subsidiary IPO Equity Value Increase"

[Asia Economy Reporter Ji Yeon-jin] IBK Investment & Securities expects the value of shares in Hancom to rise due to the initial public offering (IPO) of its subsidiary Hancom Lifecare.

Hancom Lifecare has submitted a preliminary review request for its IPO. Last year, its sales reached 151.8 billion KRW, a 128% increase compared to the previous year, and operating profit rose by 323.7% to 38.7 billion KRW. Last year, sales of masks and quarantine-related products surged due to COVID-19, resulting in high growth rates and profitability.

This year, sales are expected to grow by +15% year-on-year to reach 175 billion KRW. The diversification of mask and quarantine products is expected to lead the growth of the quarantine business.

Additionally, by expanding the smart city business that combines drone and ICT technologies, benefits from the government’s digital and green new deal projects are anticipated.

Profitability is expected to slow compared to the previous year due to investments for new business expansion and a decline in mask unit prices, but the operating profit margin is projected to remain above 20%.

Lee Seung-hoon, a researcher at IBK Investment & Securities, stated, "Hancom Lifecare grew more than twice in 2020 and is expected to maintain high growth this year, so its corporate value is estimated to be around 500 billion KRW," adding, "Hancom’s shareholding ratio is about 40%, so the subsidiary’s value is expected to exceed 200 billion KRW."

Moreover, Hancom’s collaboration with Amazon to enter the global Software as a Service (SaaS) market is also expected to act as a positive factor. They plan to launch Hancom Works, a collaborative service, on the Amazon Marketplace. Since Germany’s Nextcloud will supply it to the European market, overseas sales growth is anticipated. The researcher said, "After COVID-19, global cloud companies are actively investing in smart work services," and added, "Since the company has been closely cooperating with Amazon since 2018, it is expected to launch additional Amazon-based cloud services following Hancom Works."