[IPO Spotlight] Obigo Prepares to Become a Leading Vehicle Software Company

Offering Price to Be Finalized Through Demand Forecast on 28-29th
Offering Price Set at 12,400-14,300 KRW, Expecting Minimum Fundraising of 27.4 Billion KRW
Funds to Be Used for Debt Repayment, R&D, and New Service Operation Investments

[Asia Economy Reporter Hyungsoo Park] Obigo, a developer of in-vehicle software platform technology, is entering the KOSDAQ market. The company plans to expand its smart car software platform-based business areas using funds raised through its initial public offering (IPO).

According to the Financial Supervisory Service's electronic disclosure system on the 15th, Obigo will issue 2,211,820 new shares for the IPO. The expected price range is 12,400 to 14,300 KRW per share, with a minimum public offering amount of 27.4 billion KRW. Demand forecasting for institutional investors will be conducted over two days from the 28th to the 29th, after which the offering price will be finalized. Based on the offering price, the market capitalization is estimated to be between 137.1 billion and 158.1 billion KRW, with a price-to-earnings ratio (PER) of 11.3 to 13.1 times based on Obigo’s projected 2022 earnings.

Obigo started as a mobile phone Wireless Application Protocol (WAP) browser solution company. Leveraging 17 years of accumulated embedded browser technology, it developed smart car software such as the 'Obigo AGB Browser,' 'Obigo App Framework,' and 'Obigo Development Toolkit.' The company operates software solutions and content service businesses based on its smart car software platform technology. Obigo has successfully commercialized its software platform in the connected vehicle service market. Having entered a stabilization phase, Obigo’s technology has been integrated into vehicles since 2019.

Obigo also developed a smart car software platform, a creation tool that provides various application execution environments in vehicles and builds a vehicle service ecosystem. With advancements in communication, artificial intelligence, autonomous driving, and Internet of Things technologies, the smart car market is just beginning to open. Obigo is expanding its business areas to include AI voice assistant services, e-commerce functions, autonomous driving, as well as electric and hydrogen vehicle service technologies.

Obigo’s revenue structure is divided into joint research and development, royalties, maintenance, and licensing. Chan-sol Park, a researcher at SK Securities, explained, "Joint research and development costs are estimated to be in the tens of billions of KRW per project," and "Royalties typically range from 1,000 to 8,000 KRW per produced vehicle."

Last year, Obigo recorded operating revenue of 12.1 billion KRW, an operating loss of 1 billion KRW, and a net loss of 3.9 billion KRW. Most of the order amounts and operating revenue were related to joint research and development. Software technology implementation fees are received during the development and commercialization stages of finished vehicles. Royalties are expected to begin next year when customers start full-scale production of vehicles equipped with Obigo software.

NH Investment & Securities, the lead underwriter, identified Hancom MDS and Thinkware as comparable companies. Using the average price-to-earnings ratio (PER) of 26.13 times for these companies, NH Investment applied a discount rate to Obigo’s estimated net profit of 17.7 billion KRW for 2023. The per-share valuation was calculated at 22,035 KRW, and applying a discount rate of 35.10% to 43.73%, the proposed offering price band was set at 12,400 to 14,300 KRW.

NH Investment & Securities noted that the 2023 net profit estimates, as well as figures for market estimates, usage rates, and sales volumes applied in revenue projections, are based on Obigo’s business plan targets and may reflect subjective opinions.

Funds raised through the IPO will be used for debt repayment, research and development, and investment in new service operations. Of the funds, 5 billion KRW will be allocated to repay debt, and 13.6 billion KRW will be invested in research and development. The R&D budget will be used to advance smart car software products, strengthen product competitiveness through cloud-based HMI, data frameworks for autonomous driving sensor data collection technology, and AI technology development. Additionally, 4.2 billion KRW is budgeted for investment to expand overseas business. The existing U.S. subsidiary will be expanded, and new subsidiaries will be established in Japan and Europe.