Will IPO 'Daeo' Shift Up Soar on Its First Day?

3.5 Trillion Market Cap at IPO Price 'Big Fish'
Recent New Listing's First Day Stock Performance Weak
Expecting Market Settlement Based on Solid Earnings

Attention is focused on the stock price movement of Shift Up, considered a major player in the IPO market this second half of the year, on its first day of listing. This is due to the sluggish stock performance of newly listed companies recently entering the domestic stock market and the weakened investment sentiment toward the gaming sector. Shift Up's stock price movement after listing is expected to have a significant impact on the IPO market in the second half of the year.

According to the financial investment industry on the 9th, Shift Up's market capitalization reaches 3.4815 trillion KRW based on the public offering price of 60,000 KRW. It will be listed on the KOSPI market on the 11th. Depending on Shift Up's stock price movement on the day of listing, changes in the market capitalization rankings of gaming stocks are also possible. Krafton has the largest market capitalization among gaming companies listed on the domestic stock market at 13.31 trillion KRW. Netmarble (4.79 trillion KRW) and NCSoft (4.14 trillion KRW) follow. Shift Up's market capitalization is larger than Pearl Abyss, which ranks 13th in KOSDAQ market capitalization with 2.89 trillion KRW.

The first-day performance of Shift Up's listing could influence the IPO market in the second half of the year. Concerns are high due to the recent poor stock price performance of newly listed companies. Has, Innospace, HVM, and SOS Lab have already seen their stock prices fall below the public offering price. Innospace, which was listed on the KOSDAQ market on the 2nd, dropped 34% compared to its public offering price of 43,300 KRW within five trading days.

There is also a possibility that the 435 billion KRW worth of Shift Up's public offering shares may not be absorbed smoothly. However, the strong interest during the demand forecast and public offering subscription is considered a positive factor. The public offering subscription held from the 2nd to the 3rd recorded a competition rate of 341 to 1. A total of 18.56 trillion KRW in subscription deposits was gathered. Shift Up conducted a demand forecast targeting domestic and foreign institutional investors from the 3rd to the 27th of last month, recording a competition rate of 226 to 1. All institutions participating in the demand forecast offered prices above the upper limit of the public offering price range (47,000 to 60,000 KRW). Approximately 26% of institutions committed to a lock-up period of more than one month.

For additional major public offering stocks to be listed, it is important that Shift Up settles smoothly in the market. Market experts expect a high likelihood of market stabilization considering the stable earnings growth trend based on solid game development capabilities.

Founded in 2013, Shift Up developed mobile games such as "Goddess of Victory: NIKKE" and console games like "Stella Blade." Based on its game development capabilities encompassing visuals and sound, it has consecutively released popular games. Last year, it recorded sales of 168.6 billion KRW, operating profit of 111.1 billion KRW, and net profit of 106.7 billion KRW. Its publishing partners include Tencent, the world's largest mobile game publisher, and Sony, the world's largest console platform operator.

Dongwoo Kim, a researcher at Kyobo Securities, analyzed, "Applying a net profit estimate of 179 billion KRW and a price-earnings ratio (PER) of 24.3 times, the appropriate stock price is 73,219 KRW." He added, "Considering the issuance of a foreign game license for 'NIKKE' in China and the planned release of the PC version of 'Stella Blade,' sales of 458.1 billion KRW and operating profit of 332 billion KRW are expected next year."

Donghwan Oh, a researcher at Samsung Securities, explained, "The competitiveness in the subculture genre and achievements in the Japanese and North American console markets are valuation premium factors." He added, "Since the public offering size is 12.5% of the total shares, which is not large, there is a high possibility of valuation overshooting upon listing." He further noted, "However, until the release of the next title, Wiccis, additional growth drivers are weak. Therefore, it is necessary to pay attention to stock price fluctuations after listing."