BlueMTech Announces October Provisional Results, Will Subscription Be Successful?

Mandatory Disclosure of Monthly Sales Before IPO to Prevent Earnings Inflation... General Subscription on July 4-5... Positive Move Towards Transparent Information Disclosure

Blue M Tech, which is pursuing entry into the KOSDAQ market through a special listing exemption for unrealized profits, has disclosed its monthly performance just before listing. This measure follows an improvement plan introduced by authorities to prevent the inflation of preliminary listing companies' performance. Along with LS Materials, it is the first case to disclose pre-IPO monthly sales.

According to the Financial Supervisory Service's electronic disclosure system on the 29th, Blue M Tech recorded sales of 95.9 billion KRW through October this year. This represents a 24.4% increase compared to last year's sales of 77.1 billion KRW. Since these are preliminary financial results, there may be changes in the October sales figure when the business report is submitted next year. The cumulative operating profit as of October was 326 million KRW, which appears to indicate a slight deterioration in profitability compared to last year's 560 million KRW.

Earlier, on the 26th, the Financial Supervisory Service, in discussions with the Korea Exchange, Korea Financial Investment Association, major securities firms, and the KOSDAQ Association, decided to significantly strengthen IPO screening to prevent a recurrence of the 'Pado incident,' which involved performance inflation controversies. Companies seeking to list on the domestic stock market must disclose their monthly performance immediately prior to listing.

A financial investment industry official said, "The effects of monthly performance disclosure will need more time to be fully understood," adding, "Efforts to provide investors with diverse and transparent information are necessary."

Blue M Tech is an online distributor of pharmaceuticals and quasi-drugs that launched Korea's first B2B distribution platform service specialized in pharmaceuticals. From 2015 to 2022, Blue M Tech recorded an average annual sales growth rate of 86.04%. It has established growth foundations through partnerships with major domestic and international pharmaceutical companies and advanced logistics systems. As of the first half of this year, it has built a platform covering more than 27,700 hospitals and clinics. It will conduct a subscription for general investors from the 4th to the 5th of next month and list on the 13th of the same month.

Hana Securities, the lead underwriter, used the price-to-sales ratio (PSR) comparison method with similar companies to estimate Blue M Tech's appropriate corporate value. This method is mainly used to value companies in the early stages of business that show significant top-line growth but operate at a loss. The online pharmaceutical distribution business is in a growth phase, and Blue M Tech's sales growth rate is high, which is why the underwriter applied the PSR valuation method.

The average PSR multiple of selected comparable companies such as WSI, HLB Therapeutics, Bit Computer, and Ubicare was calculated at 2.73 times. Applying a PSR of 2.73 times to Blue M Tech's combined sales of 95.9 billion KRW over four quarters from Q3 last year to Q2 this year results in a corporate value of 262.2 billion KRW. Applying a discount rate of 19.96% to 36.81%, the proposed public offering price range was set at 15,000 to 19,000 KRW.

Kim Hyun-soo, CEO of Blue M Tech, said, "We have secured entry barriers by preempting the pharmaceutical distribution market," adding, "We will continue to grow steadily through diversification of commerce business and advancement of platform services."

Blue M Tech is pursuing a transition from pharmaceutical e-commerce to a comprehensive e-commerce platform. It plans to expand its customer base through diversification, including targeting the refrigerated pharmaceutical distribution market for pharmacies, developing a dental e-commerce platform, and independently developing and selling quasi-drugs and consumables.

Jung Byung-chan, CEO of Blue M Tech, said, "We provide new value to the pharmaceutical distribution industry by simplifying complex distribution structures and establishing a transparent sales system."

The funds raised through the IPO will be invested in ▲ upgrading logistics center facilities ▲ developing systems for entering the hospital market ▲ expanding into electronic medical record-linked businesses. Through the logistics center, it also plans to provide third-party logistics (3PL) and fulfillment services to pharmaceutical companies. It expects to offer competitive logistics services by automating order confirmation and packaging and establishing a warehouse management system.