[IPO Spotlight] YoonSung F&C, Warning Signs in Investor Sentiment Due to WCP

Yoonseong F&C to Raise 100 Billion KRW Through New Share Issuance and Existing Share Sales
Institutional Demand Forecast on 26-27 Draws Attention
Funds to Be Used for Expansion Investment and Business Area Growth

[Asia Economy Reporter Hyungsoo Park] Yoonsung F&C, a secondary battery mixing equipment company, is set to be listed on the KOSDAQ market. WCP, a secondary battery separator company that had garnered attention in the IPO market in the second half of this year, has fallen below its public offering price after listing, which is expected to impact the demand forecast for Yoonsung F&C as well.

According to the Financial Supervisory Service's electronic disclosure system on the 5th, Yoonsung F&C will open subscription for public offering shares to general investors for listing on the KOSDAQ market from the 2nd to the 3rd of next month. The desired public offering price per share ranges from 53,000 to 62,000 KRW, with a total offering size of 105.7 billion to 123.7 billion KRW. The lead underwriter is Mirae Asset Securities.

Founded in 1986, Yoonsung F&C began its secondary battery equipment business in earnest in 2003. It has been recognized for its technology by supplying mass-production mixers to LG Energy Solution and SK On. Mixers are equipment necessary for mixing raw materials in powder or liquid form required for secondary batteries. Its clients include major domestic and international secondary battery manufacturers and electric vehicle companies such as SK On, LG Energy Solution, Samsung SDI, and Rivian. In the first half of this year, it recorded cumulative sales of 108 billion KRW, operating profit of 14.7 billion KRW, and net profit of 13.8 billion KRW, surpassing last year's sales of 75.9 billion KRW.

The lead underwriter, Mirae Asset Securities, selected three companies?PNT, Daebo Magnetic, and Nsys?as final comparable companies to determine Yoonsung F&C's public offering price. Based on the average price-earnings ratio (PER) of 21.06 times of these three companies, the first half net profit was annualized to calculate a per-share valuation of 72,710 KRW. Applying a discount rate of 14.73% to 27.11%, the desired public offering price range was set at 53,000 to 62,000 KRW. This discount rate is lower than the average discount rate of 24.17% to 36.88% applied by newly listed companies on the KOSDAQ market since January last year. Yoonsung F&C included 1.7 million newly issued shares and 300,000 existing shares in the public offering.

The public offering price will be finalized after conducting a demand forecast targeting institutional investors over two days from the 26th to the 27th. Given the increasing volatility in the domestic stock market, there is a possibility that the public offering price may fall outside the desired range. Among recently listed secondary battery-related companies on the KOSDAQ market, WCP and HYTC have traded below their public offering prices. WCP was listed on the 30th of last month at a public offering price of 60,000 KRW. It closed at 41,700 KRW on the first day of listing and at 44,800 KRW on the 4th, the following day. Considering that the demand forecast had proposed a price range of 80,000 to 100,000 KRW, it appears that expectations for new secondary battery stocks have lowered.

It is expected to raise at least 88 billion KRW through the IPO. The raised funds will be used for expanding the Anseong factory, research and development expenses, and debt repayment. Additionally, 33 billion KRW has been separately allocated for new business investments and operating funds. The company explained that it plans to explore business area expansion by utilizing surplus funds.

Majority shareholder CEO Chi-Young Park holds 78.14% (4.91 million shares) of the shares before listing. He joined Yoonsung F&C in August 2003, handling technical sales for secondary battery equipment. After becoming CEO in 2012, he strengthened research and development investment and quality control. He expanded the Hwaseong factory into four plants to respond to increasing order volumes. Considering the rise in facility investments by secondary battery companies, he constructed a new factory in Anseong, Gyeonggi Province, doubling production capacity.

CEO Chi-Young Park said, "Yoonsung F&C is growing based on high technological competitiveness and supply capacity," adding, "We will lead the secondary battery mixing system market as the number one company worldwide, beyond Korea."