E8, Pursuing Technical Special Listing... Convincing Performance Estimates Are Key

Issued 1.13 Million Shares to Enter KOSDAQ
Expecting to Raise at Least 16.4 Billion KRW Through IPO
Company Valued at 250 Billion KRW

Digital twin platform developer E8 is entering the KOSDAQ market through a technology special listing. Following the Pado earnings inflation scandal, interest in companies pursuing technology special listings has increased, drawing more attention. E8 calculated an appropriate corporate value based on the assumption that its operating revenue will rapidly grow this year and next year. The public offering price may decrease or increase depending on the criteria of institutional investors participating in the demand forecast.

According to the Financial Supervisory Service's electronic disclosure system on the 12th, E8 will issue 1.13 million new shares for listing on the KOSDAQ market. The desired public offering price range is 14,500 to 18,500 KRW. It is expected to raise at least 16.4 billion KRW through the initial public offering (IPO). From the 29th of this month to the 2nd of next month, demand forecasting will be conducted targeting institutional investors to finalize the public offering price.

The lead underwriter Hanwha Investment & Securities selected five comparable companies?K-Sign, Fasoo, iQuest, Younglimwon Soft Lab, and BridgeTec?to calculate E8's appropriate corporate value. Applying the average price-earnings ratio (PER) of 27.39 times of these five companies, next year's estimated net profit of 13.152 billion KRW, and a discount rate of 20%, the calculated corporate value is 250 billion KRW.

The underwriter explained that this applied the estimated net profit for 2025, when E8's main business of simulation software is expected to show stable growth and the digital twin platform service business is anticipated to yield results.

E8's operating revenue increased from 300 million KRW in 2022 to 2.2 billion KRW as of the cumulative third quarter last year. It is estimated to reach 16.4 billion KRW this year and 30.6 billion KRW in 2025. The company is expected to turn a profit this year and achieve an operating profit of 14 billion KRW next year. Digital twin solution construction service fees and software license fees are expected to start generating revenue in earnest from this year.

The investment banking (IB) industry urged careful scrutiny of the basis for estimating performance following last year's Pado earnings inflation scandal. Hanwha Investment & Securities reflected estimated performance by categorizing projects into those already secured, highly probable projects, and projects under collaboration discussions. Even if the probability is high, there is a possibility of not securing the project or not proceeding with it. The estimated 16.4 billion KRW for this year represents about a 360% increase compared to last year's estimate of 3.6 billion KRW. This appears to reflect expectations that orders will increase as the market matures, given the nature of E8's business area.

E8 is a digital twin platform company that implements Level 3 digital twins equipped with simulation technology for the first time in Korea. Digital Twin refers to a technology that replicates the real world in a virtual world, then predicts outcomes and formulates strategies through simulation. It is a concept initially proposed for efficient product lifecycle management, where real-world data moves to the virtual world, and information and processes circulate back to reality from the virtual world.

Founded in May 2012, E8 developed 'NFLOW,' a particle-based simulation that can complement the limitations of existing grid-based simulations. Its self-developed digital twin platform integrates various elemental technologies such as artificial intelligence (AI), Internet of Things (IoT), cloud, and 3D visualization. Based on its advanced technology, it is establishing national data standards for digital twins.

It has secured future growth engines by expanding applications in secondary batteries, building energy management, and food manufacturing. It is participating in the digital twin construction for the national pilot city projects, Sejong and Busan smart cities. Last year, the Deputy Minister of Housing of Saudi Arabia personally visited E8 to discuss collaboration related to smart cities.

To pursue listing based on the KOSDAQ market's technology growth special listing requirements, E8 received an A grade evaluation for its 'simulation-based digital twin solution' from Korea Technology Finance Corporation and the Korea Invention Promotion Association.

E8 plans to use the funds raised through the IPO to advance simulation and digital twin technologies and pursue strategic mergers and acquisitions (M&A). An E8 official stated, "We will compete with global digital twin companies and move forward, using the KOSDAQ market listing as a stepping stone."