[Reading the Securities Report] Will Innospace Become Korea's SpaceX... Innospace Begins KOSDAQ Listing

Hybrid Rocket Technology-Based Space Launch Vehicle Startup
All Global Small Launch Vehicle Companies in Deficit... "Commercialization is Important"

Innospace, a space launch vehicle startup, has submitted a securities registration statement and begun the process of listing on the KOSDAQ. The company has experience successfully test-launching the first hybrid rocket technology-applied launch vehicle by a domestic private company. However, since it has yet to generate actual earnings, the key issue is whether the company’s projected performance estimates can convince institutional investors.

Innospace was established in 2017. It is the only domestic space launch vehicle startup based on proprietary hybrid rocket technology. In March last year, it demonstrated its technological capability by successfully test-launching the 'Hanbit-TLV' test vehicle, the first hybrid rocket technology-applied test launch by a domestic private company.

Building on its technological strength, Innospace has intensified its sales activities targeting global space customers. As a result, it has signed multi-launch service contracts using the ‘Hanbit’ space launch vehicle with four overseas satellite companies and universities in countries including Italy and Brazil.

Additionally, in April this year, Innospace signed a Memorandum of Understanding (MOU) for mutual cooperation and commercialization in the space and defense sectors with the domestic defense company LIG Nex1. The companies are actively discussing mutual cooperation to strengthen technology in the defense business sector and expand joint projects, thereby pursuing diversification of business areas.

For its KOSDAQ listing, Innospace plans to issue 1.33 million new shares. The desired public offering price per share ranges from 36,400 to 45,600 KRW. Through this offering, the company aims to raise approximately 48.4 billion to 60.6 billion KRW.

When determining the offering price, the lead underwriter Mirae Asset Securities and Innospace used the price-to-earnings ratio (PER). Comparable companies selected were Korea Aerospace Industries, Hanwha Systems, and Zenoco. Their PERs are 21.42x, 73.31x, and 39.34x respectively, with an average of 44.69x.

Innospace, which is listing through a technology special case, is currently operating at a loss. On a consolidated basis, it recorded sales of 342.2 million KRW and an operating loss of 25.8 billion KRW in 2022. Last year, sales were 231.42 million KRW with an operating loss of 15.9 billion KRW. Therefore, performance forecasts were used to calculate the offering price.

Innospace and Mirae Asset Securities expect losses to continue through this year. The projected sales for this year are 2 billion KRW, with an operating loss of 17.3 billion KRW. However, starting next year, they anticipate revenue from launch services to begin in earnest with the first commercial launch. Consequently, they forecast sales of 47.8 billion KRW and operating profit of 1.8 billion KRW in 2025, and sales of 97.2 billion KRW with operating profit of 21.2 billion KRW in 2026.

Based on this, Innospace and Mirae Asset Securities calculated an estimated per-share valuation of 61,020 KRW for 2026. Applying a discount rate of 25.20% to 40.30%, they arrived at the current desired public offering price.

The company plans to use the raised funds for facilities and operating capital. Based on the lower end of the offering price, 17.8 billion KRW will be invested in fuel production facilities and construction of launch vehicle manufacturing sites. Operating funds will be allocated to personnel expenses and investments in aerospace industry-related technologies.

However, whether the company can achieve the projected performance remains uncertain. Globally, all small launch vehicle companies that have succeeded in commercial launches are operating at a loss. Although not a direct competitor, SpaceX, which manufactures and services large launch vehicles, recorded losses for 20 years since its founding in 2002. It only posted a profit in the first quarter of last year, underscoring the importance of commercialization.

Through the securities registration statement, the company explained, "Direct global competitor Rocket Lab is showing sales growth trends but continues to post losses," and "Astra, after achieving orbital launch success in 2022, has experienced repeated launch failures with the same model and is developing a new engine, resulting in increasing annual losses." It added, "The space launch vehicle market is still in an early stage, and competitors are also operating at a loss while seeking to secure business viability."