[Click eStock] "Seoul Auction, a second half full of domestic and international expectations"

Hanyang Securities analyzed on the 21st that Seoul Auction aims to capture both the Hong Kong and domestic auction markets in the second half of the year, and its performance could grow significantly.

Seoul Auction is a company specializing in the sale, auction, and brokerage of artworks, established in December 1998. It was listed on the KOSDAQ market in July 2008. Based on sales proportions as of last year, artwork sales accounted for 55.31%, artwork auctions 32.07%, artwork brokerage 5.16%, and artwork collateral loans 2.89%. The domestic artwork auction market is an oligopoly with Seoul Auction and K Auction holding about 90% of the market share.

Lee Jun-seok, a researcher at Hanyang Securities, explained in a report on the day, “During the boom in the artwork auction market in 2021, the average winning bid rate was 84%. Before 2020, it was between 70-74%, but as the winning bid rate rose sharply, the company’s performance also increased. However, after the interest rate hike period last year, the market turned bearish.”

However, he said, “The trend seems to be changing now. On the 2nd, the company disclosed artwork product sales of 9 billion KRW, which greatly exceeds the highest sales of 5 billion KRW in the past seven years,” adding, “In November, an offline artwork auction in Hong Kong is scheduled for the first time in four years. Unlike competitors, the company owns a Hong Kong subsidiary. They plan to actively respond to and target the Hong Kong market, one of the largest auction markets in the world.”

He also noted, “Offline auctions held 12 times a year and online auctions held weekly are also seeing rising demand,” and added, “During the active period of the Hong Kong subsidiary in 2018 and the boom in the domestic artwork auction market in 2021, the company’s stock price also rose. This time, they aim to capture both the Hong Kong and domestic auction markets simultaneously. Although they may not reach the peak scale, even reaching a certain level would mean a significant upside for second-half performance.”

Furthermore, he said, “Artwork collateral loans are also a promising business. With about 28 billion KRW in cash, they provide short-term artwork collateral loans at a monthly interest rate of 1%,” and forecasted, “With quarterly profits of 500 to 600 million KRW, they expect annual profits of 2 to 2.4 billion KRW this year.”

He added, “Additionally, the entry of government and private companies into the token securities (STO) market is a positive factor,” and stated, “This will promote growth in the art market and is expected to benefit the company, which sells, auctions, and brokers high-priced artworks.”