[Reporter Reading Securities Registration] ISTE Reduces IPO Size and Reattempts Public Offering

Semiconductor Equipment Specialist Company... "Reducing IPO Shares by 300,000 for a Retry"
"Overall Earnings Forecast Lowered Compared to Previous Estimates"

ISTI is making a second attempt to list on the KOSDAQ. Last year, it withdrew due to instability in the domestic stock market and a contraction in the public offering market. The biggest difference this time is that the public offering size has been reduced.

ISTI was established in 2013. In its early days, it manufactured vacuum logistics equipment used in organic light-emitting diode (OLED) and liquid crystal display (LCD) devices, but expanded its business area by developing semiconductor equipment. Its main product is the semiconductor FOUP (Front Opening Unified Pod) cleaner equipment. This equipment protects wafers from various impurities generated during the semiconductor manufacturing process. It also develops and supplies FOUP cleaners for high bandwidth memory (HBM).

As a future growth engine, the company is focusing on plasma-enhanced chemical vapor deposition (PECVD) equipment for next-generation semiconductor processes. PECVD is equipment used in semiconductor deposition processes that uses plasma to deposit gaseous materials onto the substrate surface. The company explained in its securities report, "After completing the Qual Test in 2024, as of the submission date of the securities report, mass production volume evaluation is underway, and commercialization is expected to be completed soon."

ISTI attempted to list on the KOSDAQ last year. However, considering the prolonged instability of the domestic stock market and contraction of the public offering market, it withdrew its listing. This is its second attempt.

The difference from last year is the reduced public offering size. The desired public offering price remains unchanged at 9,700 to 11,400 KRW. However, the number of shares offered has decreased from 1.6 million to 1.3 million shares. As a result, the total public offering amount decreased from 15.5 billion to 18.2 billion KRW to 12.6 billion to 14.8 billion KRW. Regarding this, the company stated, "By lowering the public offering size and corporate value, we have reduced the burden on investors in the public offering market."

Another change is in the earnings forecast. ISTI will enter the KOSDAQ market through a technology special listing. As it is listing via a technology special, it provides future earnings forecasts. The preliminary settled sales and operating profit for last year were 41.5 billion KRW and 1.1 billion KRW, respectively. These figures decreased compared to the initial securities report submission, which forecasted sales of 43.9 billion KRW and operating profit of 2.3 billion KRW.

There have also been changes in this year's and next year's earnings forecasts. Previously, the expected sales and operating profit for this year were 68.9 billion KRW and 10.8 billion KRW, but in the latest securities report, sales increased to 70.6 billion KRW while operating profit decreased to 10.5 billion KRW. For next year, the forecast was lowered from 90.9 billion KRW in sales and 18.9 billion KRW in operating profit to 87.6 billion KRW and 17.5 billion KRW, respectively. Overall, the earnings expectations have been lowered.

Along with this, the discount rate was increased. Previously, ISTI’s per-share valuation was 16,764 KRW with a discount rate of 31.50% to 42.00%. However, in this evaluation, the per-share valuation rose to 18,535 KRW. This is because the price-to-earnings ratio (PER) of comparable companies increased and the number of shares used to determine the public offering price was reduced. Applying a discount rate of 38.00% to 47.50% resulted in the current desired public offering price.

ISTI plans to use 4 billion KRW of the funds raised through this public offering to acquire new factory land to expand production capacity. The site is located within the 2nd Yongin Techno Valley Industrial Complex. Additionally, 5.4 billion KRW will be used for the development and commercialization of PECVD equipment. The remaining 3 billion KRW will be allocated to repay borrowings.