[IPO Spotlight] Winia Aid, Public Offering Price Draws Attention Amid Frozen Investor Sentiment

Public Offering Price Range 14,200~16,200 KRW
Bookbuilding from the 9th for Two Days Next Month

[Asia Economy Reporter Park Hyungsoo] As volatility in the domestic stock market increases, the initial public offering (IPO) market is also freezing up. While native app store One Store and corrugated paper manufacturer Taelim Paper have successively decided to withdraw their listings, Winia Aid is pushing forward with its listing on the KOSDAQ market. Winia Aid, responsible for distribution and logistics within the Daewoo Winia Group, plans to invest the raised funds in strengthening logistics competitiveness.

According to the Financial Supervisory Service's electronic disclosure system on the 12th, Winia Aid will issue 5,336,087 new shares to raise at least 76.2 billion KRW. The proposed price range for the public offering is set at 14,200 to 16,200 KRW per share. Demand forecasting will be conducted over two days from the 14th to the 15th of next month targeting institutional investors, and the public offering price will be finalized.

Shinhan Financial Investment, the lead underwriter, selected 12 comparable companies to calculate an appropriate public offering price for Winia Aid. These companies include Paseco, Shinil Electronics, Shinsegae International, Hyundai Department Store, Gwangju Shinsegae, Savezone I&C, Kyungbang, Hyundai Glovis, Sebang, KCTC, Intergis, and Hyosung ITX. The average price-to-earnings ratio (PER) of these comparable companies was 12.41 times, and based on last year's net income, the per-share valuation was 20,100 KRW. Applying a discount rate of 19.4% to 29.4%, the proposed price range for the public offering was presented.

Winia Aid's main business segments are distribution, logistics, and services. As of the end of last year, the sales composition by segment was 28% distribution, 32% logistics, 39% services, and 1% others. Last year, the company recorded sales of 486.5 billion KRW and an operating profit of 34.4 billion KRW. Sales increased by 16.2% compared to 418.5 billion KRW the previous year, and operating profit rose by 9.3% compared to 31.5 billion KRW.

Winia Aid was spun off from Winia in January 2015 to strengthen expertise in logistics and services and to enhance customer satisfaction. The Daewoo Winia Group acquired Winia Electronics in February 2018. Along with acquiring Winia Electronics, its subsidiary Daewoo Electronics Service was also incorporated into the group. In July 2019, to create synergy between service companies, Daewoo Electronics Service was merged, establishing the current business structure.

Over the past three years, sales and operating profit have recorded compound annual growth rates of 25.2% and 61.2%, respectively. This growth resulted from stable home appliance distribution sales, expansion of the logistics business segment, and the launch of new businesses such as Apple services and device replacement programs. Winia Aid has pursued diversification of sales channels based on know-how and infrastructure accumulated from group company logistics volumes. Additionally, it has maintained service agency relationships with home appliance companies such as Apple, Tefal, and Electrolux through its service organizations and centers, contributing to growth. The ordinary profit margin has remained in the 7% range for two consecutive years.

To secure logistics competitiveness, the company is considering purchasing logistics warehouses and investing in logistics facilities. It plans to continue its logistics business by acquiring self-owned warehouses in Hwaseong, Namyangju, and Gimpo. It expects to reduce rental costs due to leasing, as well as costs and time associated with warehouse relocation. Investment in automated logistics warehouse systems is also anticipated to enhance competitiveness in the logistics business.

Winia Aid secures stable logistics volumes based on affiliated company shipments. It is open to attracting customers by handling logistics and installation agency services for other client companies' products. Utilizing Winia Aid's logistics infrastructure enables one-stop services from export/import, inland transportation, warehouse storage, to delivery and installation. After installation, after-sales service (A/S) and consultation (call) are also available as one-stop services, which is a strength in attracting customers.

While stable growth is expected, the problem lies in the freezing IPO market. Fear of stagflation, where inflation rises despite economic slowdown, has increased volatility in domestic as well as U.S. and major global stock markets. Institutional investor participation is low to the extent that One Store, which was expected to revitalize the IPO market, decided to withdraw its listing. Since there is still some time until demand forecasting begins on the 9th of next month, the current atmosphere may not necessarily continue.

Winia Aid's largest shareholder is Winia, holding a 78.7% stake before the public offering. Daewoo Winia Chairman Park Young-woo and Daewoo Holdings hold 11.6% and 9.4%, respectively. Additionally, two minor shareholders hold 0.28%. The fact that the public offering will be conducted solely through new share issuance without selling existing shares is considered a positive factor.