"Performance Decline Is Temporary"... Posbank Ahead of KOSDAQ IPO, Growth Unwavering

Cumulative Sales of 63.5 Billion KRW and Operating Profit of 8.3 Billion KRW in Q3 This Year, Decline Compared to Previous Year
Performance Improvement from November... Demand Forecast for Institutional Investors from January 5 to 11

POS terminal and kiosk (KIOSK) specialist manufacturer Posbank is proceeding with an initial public offering (IPO) to be listed on the KOSDAQ market. Posbank has experienced stagnation from 2021 to 2022 and reported declining performance in the third quarter of this year as well. However, the company maintains that this is a temporary impact and there is no problem with growth.

According to the Financial Supervisory Service's electronic disclosure system, Posbank's sales, which were 61.7 billion KRW in 2020, stagnated at 91.5 billion KRW in both 2021 and 2022. This is due to concerns over economic recession caused by global high inflation, high interest rates, and geopolitical risks.

This year's performance is similar. As of the third quarter cumulative, sales reached 63.5 billion KRW and operating profit was 8.3 billion KRW, down 13.69% and 20.69% respectively compared to the same period last year. This trend continued in October as well. The company explained in its securities registration statement that cumulative (preliminary) sales until October this year were 67.3 billion KRW and operating profit was 7.8 billion KRW. The company attributed the decline in performance to weak demand for existing products. The statement said, "Following the third quarter, weak demand for existing products continued in October ahead of new product launches."

However, Posbank claims this is a temporary cause. A company official said, "Although performance temporarily declined in October due to preparations for new product launches and replacement demand, it increased from November," adding, "Performance in November and December is expected to improve compared to October, and the fourth quarter is expected to be at the level of the previous year."

In particular, the company expects performance to improve going forward. The official said, "We plan to carry out various new product-related projects, including new product launches targeting large clients," and added, "Performance improvement is expected through expansion into regions such as the Middle East, Latin America, Southeast Asia, as well as domestic market expansion."

Posbank was established in 2003. It has a diverse customer base ranging from retail sectors such as domestic and international large marts and convenience stores to the food service industry including restaurants and cafes. Posbank has also built a global network with over 200 clients in 80 countries worldwide, including the Americas, Europe, Asia, the Middle East, and Africa. As a result, overseas sales account for a significant portion. As of the third quarter this year, 74% of total sales were generated from exports. From January 5 to 11 next year, demand forecasting will be conducted for institutional investors, followed by a general subscription on January 17 and 18.

Hana Securities, the lead underwriter, applied the price-earnings ratio (PER) to determine Posbank's offering price. Comparable companies include Bigsolon, Tobis, Hannet, and Korea Electronic Finance. The average PER of these companies is 17.58 times, which results in an estimated per-share valuation of 18,122 KRW for Posbank. Applying a discount rate of 17.23% to 28.26%, the proposed offering price range is 13,000 to 15,000 KRW.

Posbank plans to use most of the funds raised from this offering for product manufacturing and research. Based on the lower end of the offering price, it plans to raise 19.5 billion KRW. Specifically, 8 billion KRW will be used for factory expansion, production line increase, and establishment of an SMT line, with 2.9 billion, 2.6 billion, and 2.5 billion KRW allocated respectively. Additionally, 6 billion KRW and 1.6 billion KRW will be invested in new product and software development respectively. The remaining 3.765 billion KRW will be used as working capital.