[IPO Spotlight] Narasella, First Domestic Wine Industry IPO Challenge

Pernod Ricard, Louis Vuitton, and L'Or?al-Ferrier as Similar Companies
Post-IPO Expected Market Capitalization of 141.7 Billion to 167.4 Billion KRW
Plan to Build Wine Specialty Logistics Center with Raised Funds

Wine import company Narasella selected overseas companies Pernod Ricard, Louis Vuitton Mo?t Hennessy (LVMH), and Laurent-Perrier as comparable companies to estimate an appropriate corporate value. This is because there are no similar companies in the wine industry as Narasella is the first to pursue a public listing.

According to the Financial Supervisory Service on the 27th, Narasella proposed a public offering price range of 22,000 to 26,000 KRW per share to list on the KOSDAQ market. From the 14th to the 17th of next month, a demand forecast will be conducted targeting institutional investors, and the public offering price will be finalized. A total of 1,450,000 shares will be offered, including 1,232,500 newly issued shares and 217,500 existing shares. The expected market capitalization after the offering is 141.7 billion to 167.4 billion KRW. The lead underwriter is Shin Young Securities.

Narasella's logistics center in Gwangju, Gyeonggi-do.

Founded in 1990 as a wine import specialist company, Narasella has secured exclusive supply rights for over 120 brands and more than 1,000 types of wine. Narasella exclusively imports 'Montes Alpha,' which was the first in Korea to surpass cumulative sales of 10 million bottles. All imported wines are high-quality wines that have passed strict blind tests conducted internally by Narasella. Last year, the company recorded sales of 107.2 billion KRW, operating profit of 12 billion KRW, and net profit of 8.9 billion KRW. As wine popularity rises domestically, sales continue to grow steadily.

A Narasella representative explained, "We manage major wineries at the CEO level," adding, "Our strengths include operating a logistics center with a storage and delivery system specialized for wine, and a wine culture complex space developed independently." They further noted, "Major wineries sometimes issue official letters recognizing Narasella's exclusive status," emphasizing, "This is an extremely rare case in the wine industry and a sign of trust in Narasella."

The lead underwriter Shin Young Securities selected Lotte Chilsung Beverage, Hite Jinro, Pernod Ricard, Louis Vuitton, Laurent-Perrier, Brancquen Pommerie Monopol, and Mascia Agricola as comparable companies. Pernod Ricard is a company that produces and sells alcoholic beverages such as Jameson whiskey and The Glenlivet whiskey. Louis Vuitton sells wine, cognac, perfume, cosmetics, bags, wristwatches, and jewelry. Representative products include Mo?t & Chandon, Krug, Ch?teau d'Yquem wine, and Hennessy cognac. Laurent-Perrier manufactures champagne and distributes it worldwide. Its representative products are Laurent-Perrier, Champagne de Castellane, and Salon. Brancquen Pommerie Monopol also produces, distributes, and sells alcoholic beverages, with Champagne Pommery as a flagship product. Mascia Agricola produces wine and operates vineyards in Italy.

There is a difference between Narasella, which is distribution-focused, and comparable companies that produce and distribute globally well-known brands. The average price-earnings ratio (PER) of comparable companies was calculated at 23 times. Applying a PER of 23 times to Narasella’s net profit of 8.9 billion KRW last year results in a per-share valuation of 31,883 KRW. Applying a discount rate of 18.5% to 31.0%, the proposed public offering price range was set at 22,000 to 26,000 KRW per share.

A Shin Young Securities representative explained, "The final selected comparable companies differ from Narasella in terms of business structure, market share, workforce level, financial stability, management, and management strategy to some extent," adding, "Investors should be aware of these differences when making investment decisions based on the status and reference information of comparable companies."

Narasella plans to raise about 27 billion KRW to build an urban logistics center covering both Gangnam and Gangbuk areas of Seoul, purchase high-priced wines through open markets in France and the United States, and expand digital online sales channels. It will invest 15 billion KRW to build the urban logistics center. The company will lease approximately 495.8 square meters near Seoul’s Gangnam area, such as Songpa-gu or Hanam-si in Gyeonggi Province. It will also lease logistics warehouses near Seoul’s Gangbuk area, such as Ilsan-si in Gyeonggi Province.

Narasella will manage all elements necessary to maintain wine quality by establishing the logistics center. Automated equipment such as a DPS (Digital Picking System) will be installed and operated within the year to improve operational efficiency. A premium wine zone will also be separately established to provide the highest quality for high-priced wines. Ma Seung-cheol, CEO of Narasella, said, "Through the listing, we will establish ourselves as Korea’s top wine distribution company."