[Reporter Reading Securities Report] LG Picks 'Angel Robotics' for KOSDAQ Listing Countdown

Wearable Robot Company Raises 17.6 to 24 Billion KRW for R&D
Technical Special Listing... "Expecting Profit Turnaround by 2025"

Angel Robotics, a wearable robot company backed by LG Electronics, is entering the KOSDAQ initial public offering (IPO) process. Angel Robotics plans to use the funds raised through the listing for research and development (R&D) and expansion into overseas markets.

Angel Robotics, a Wearable Robot Company with LG Electronics as a Major Shareholder

Angel Robotics recently submitted a securities registration statement and started the KOSDAQ public offering process. A total of 1.6 million shares will be offered. Angel Robotics is a wearable robot specialist company established in February 2017. It operates businesses related to gait rehabilitation (MEDI), industrial safety (GEAR), daily assistance (SUIT), and robot components (KIT).

Looking at Angel Robotics' major shareholders, a familiar company can be found: LG Electronics. It holds a 7.22% stake (960,000 shares) and is a major shareholder. Angel Robotics received investment from LG Electronics in 2017. LG Electronics' shares will be subject to a one-year lock-up period after the public offering. The largest shareholder is CEO Gong Kyung-cheol, holding 26.08% (3,467,560 shares).

Angel Robotics' flagship product is the AngelX M20 in the MEDI category. This product is a gait rehabilitation robot. It offers easy and quick attachment and detachment compared to other products. It is available in large and small sizes, allowing both adult and pediatric patients to wear it conveniently. The company emphasizes that it can collect and analyze patient movement data to enable precise treatment prescriptions and diagnoses.

The product has been sold to over 70 locations, including top-tier general hospitals such as Sinchon Severance Hospital, Bundang Seoul National University Hospital, and Samsung Changwon Hospital. It accounted for 50.16% (1.87807 billion KRW) of the total cumulative sales (3.74425 billion KRW) as of the third quarter of last year.

Following that, the wearable suit Angel X (X), designed to prevent back injuries or occupational diseases, accounted for 34.55% (1.29364 billion KRW) of sales. This product is a non-powered wearable assistive suit. Its advantages include light weight, ease of use, and comfort. It was developed in collaboration with CJ Logistics. The product was created at LG Electronics' request, and the company plans to expand its application to workplaces and partners this year. Other daily assistance products and robot components account for a negligible portion.

Uncertainties of Technology Special Listing

Angel Robotics plans to enter the KOSDAQ market through a technology special listing. The technology special listing system allows innovative companies with excellent technology but insufficient financial requirements to list on KOSDAQ. In other words, Angel Robotics is currently operating at a loss. The key issue is whether the company can achieve actual performance after listing.

As of the third quarter of last year, Angel Robotics recorded cumulative sales of 3.7 billion KRW, a 226.32% increase compared to the same period the previous year. Considering that sales were 100 million KRW in 2020, performance is rapidly improving. However, operating profit remains in the red.

Since the company is operating at a loss, the lead underwriter NH Investment & Securities selected the desired public offering price based on future projected performance. The company and the underwriter forecast the turnaround to profitability in 2025. However, the offering price was set based on the expected performance in 2026. The underwriter expects Angel Robotics to record sales of 36.179 billion KRW, operating profit of 10.643 billion KRW, and net profit of 11.45 billion KRW in 2026.

The securities registration statement explained, "The reason for applying the estimated net profit for 2026 is that the wearable robot market is expected to expand and sales stabilize by then, while 2025 is considered an initial stage of profit generation, and considering the cost structure such as selling and administrative expenses, it is difficult to view it as a full-fledged profit period."

The lead underwriter NH Investment & Securities used the price-to-earnings ratio (PER) method to determine Angel Robotics' offering price. Two companies, Raontech and Samik THK, were selected as comparable companies. These companies are somewhat ambiguous as comparables because they do not manufacture wearable robots. Regarding this, the underwriter explained, "We considered the situation that there are no companies that can be directly selected as comparable companies for Angel Robotics as a listed company."

The average PER of Raontech and Samik THK is 37.37 times. Based on this, Angel Robotics' per-share valuation is 18,030 KRW. Applying a discount rate of 16.81% to 38.99%, the desired public offering price was set at 11,000 to 15,000 KRW.

However, there may be differing opinions on the offering price. Although direct comparison is impossible, Rainbow Robotics applied a discount rate of 31.74% to 46.91%. Also, the average discount rate for companies listed through technology special listings since 2021 was 26.29% to 39.34%. NH Investment & Securities stated in the securities registration statement, "We comprehensively considered financial growth, profitability, and the discount period of estimated performance."

Angel Robotics plans to raise 17.6 billion to 24 billion KRW through the KOSDAQ listing. Based on the lower end of the offering price, 3.3 billion KRW will be used for mass production mold investment for launching various new wearable robot products. Of the remaining 14 billion KRW, 7.2 billion KRW will be used for R&D, including the development of a wearable robot standard platform and B2C (business-to-consumer) wearable robot products. Additionally, 6.8 billion KRW will be invested to expand into overseas markets.