Heavy Dependence on Chinese Sales... Key to China's Response After Joining IPEF
[Asia Economy Reporter Hyungsoo Park] E-commerce platform company Cheongdam Global will be listed on the KOSDAQ market after a two-day public offering subscription starting today, the 24th. They are lowering the offering price to attract subscription enthusiasm.
According to the Financial Supervisory Service on the 23rd, Cheongdam Global, which is pursuing a KOSDAQ listing, finalized the desired offering price at 6,000 KRW during the demand forecast conducted on the 17th and 18th. This price was set below the lower end of the previously suggested range of 8,400 to 9,600 KRW.
The number of shares offered was also reduced. It was cut by about 1.26 million shares compared to the plan. They decided to raise only 5,073,349 shares. The total public offering amount is 30.4 billion KRW, and the market capitalization is about 123.3 billion KRW.
As major anticipated companies in the domestic IPO market have consecutively withdrawn, the number of institutional investors participating in the demand forecast has decreased.
Cheongdam Global conducted a demand forecast targeting institutional investors over two days from the 17th to the 18th. The competition rate was 24.79 to 1.
Cheongdam Global achieved consolidated sales of 144.3 billion KRW and operating profit of 9.7 billion KRW last year. Its compound annual growth rate over the past three years reached 123%. Its core strengths include ▲ the capability to provide bidirectional solutions to platforms and brand companies through big data utilization and analysis ▲ a sourcing sales network for global consumer brands ▲ and solid partnerships with global e-commerce platforms such as China's JD.COM and Alibaba.com.
The reason for Cheongdam Global's sluggish performance in the demand forecast despite its steep earnings improvement trend is pointed out to be concerns about stagflation and the high proportion of sales from China. Last year, sales to China and Hong Kong accounted for 98.1% of total sales.
Following U.S. President Joe Biden's visit to Korea, the Chinese government has expressed concerns, which may affect investor sentiment. Strong opposition from China is expected regarding Korea's participation in the Indo-Pacific Economic Framework (IPEF). On the 16th, Foreign Minister Wang Yi indirectly warned Foreign Minister Park Jin during a phone call, stating that "global industrial supply chains must be maintained stably," cautioning against Korea's IPEF membership.
Cheongdam Global is making efforts to alleviate sales concentration. Through vendor contracts related to JD.com's expansion into the Middle East and Europe, they are securing regional diversity of end customers and are promoting overseas expansion by opening the U.S. version of the direct purchase platform Baishuko. However, investors should consider that it may take longer than planned to sufficiently diversify sales target countries and clients.
Choi Seok-joo, CEO of Cheongdam Global, stated, "We are a company leading a new distribution trend that provides data-based total solutions beyond the existing wholesale and retail framework," adding, "We will continue to achieve significant growth not only in China but also in other regions such as Europe and the United States."
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