6 out of 8 Listed Companies Since September Fall Below IPO Price
K-Bank Withdrawal and Below Desired IPO Price Appear
"IPO Market Stabilizing"
The invincibility of IPO stocks has become a thing of the past. Since September, there have been no instances of "ttattabl" (a 300% increase compared to the IPO price), and many stocks have been trading below their IPO price after listing. Moreover, some companies are even withdrawing their listings or lowering their desired IPO prices during the IPO process.
According to the financial investment industry on the 25th, C-MES, which was listed the day before, closed at 23,100 KRW, down 23.00% from the IPO price of 30,000 KRW. This means it traded below the IPO price from its first day on the KOSDAQ market.
C-MES had set its IPO price at 30,000 KRW, which was 25% higher than the upper limit of the desired IPO price range of 20,000 to 24,000 KRW, based on demand forecasting conducted with domestic and foreign institutional investors. The subscription rate among general investors was 425.77 to 1. Despite exceeding the upper limit of the desired IPO price, it experienced a bitter outcome from the first day.
Not only C-MES but also the stock prices of recently listed companies show similar trends. From September this year until now, eight companies have been listed on the KOSDAQ market, including Xenics, Selbion, Inspion, YJ Link, and Lumir. Among them, only Selbion and YJ Link are trading above their IPO prices. Iron Device is currently recording its lowest price of the year.
Especially, the atmosphere during the IPO process before listing is different from the past. K-Bank, one of the major IPOs this year, decided to postpone its IPO schedule on the 18th of this month due to low competition in demand forecasting among institutional investors. K-Bank stated in a disclosure, "As a result of the recent demand forecasting with institutional investors, we did not confirm sufficient demand for a successful listing and decided to withdraw the IPO."
Additionally, Lumir recorded a low competition rate of 13 to 1 in demand forecasting. The IPO price was also set at 12,000 KRW, below the lower limit of the desired price range of 16,500 to 20,500 KRW. Securities firms analyze that, unlike in the past, the proportion of IPO prices forming at the lower limit during demand forecasting is increasing. Park Sera, a researcher at Daishin Securities, explained, "Looking at the distribution of IPO prices in demand forecasting for the third quarter, the proportion below the lower limit of the IPO price is 12.5%, which is 7.2 percentage points higher than the 5.3% in the previous quarter." Along with this, it is analyzed that the IPO market is entering a stabilization phase. There is an assessment that the previous frenzy is subsiding.
Park Jong-sun, a researcher at Eugene Investment & Securities, also analyzed, "The average competition rate for institutional demand forecasting of IPO-listed companies in the third quarter this year was 758 to 1, and the average competition rate for general subscriptions was 877 to 1. This shows that the market is transitioning to a stabilization phase as these rates are gradually similar to the average competition rates since 2017."
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