"Have They Laid the Foundation?"... Rookie Stocks Rebounding

8 Out of 10 February Debut Stocks Trade Above IPO Price
"Sector Sentiment Matters... Lower Valuations Could Revive IPO Market"

The stock prices of newly listed companies, which had been sluggish until last month, are rebounding this month. Among the 10 companies newly listed in February, 8 are trading above their initial public offering (IPO) prices. However, securities firms analyze that this is more of a differentiation by individual stocks rather than a rebound in the IPO market itself.

According to the Korea Exchange on the 25th, Winners, which was listed the previous day, closed at 34,000 won, up 300% from the IPO price of 8,500 won. The 'double double' (4 times the IPO price) record on the first day of listing was the first in six months since TDS Pharm's listing in August last year. Founded in 2004, Winners is a wiring system specialist company that develops and supplies switches, outlets, multi-taps, and circuit breakers.

Including Winners, most companies listed on the stock market this month have achieved favorable results. This month, a total of 10 companies including Samyang NChem, IGnet, PIE, LG CNS, ISTE, and Dongbang Medical were listed, and 8 of them are trading above their IPO prices. This is a better performance compared to last month. In January this year, four companies?Meatbox, Asterasys, Wisnut, and Day One Company?were listed, but only Asterasys traded above its IPO price.

The IPO market had been sluggish since the second half of last year. Investors who engaged in 'blind subscription' due to the overheated IPO market sold off the allocated shares immediately after listing, causing a 'dumping at the opening price.' As a result, the stock prices of newly listed companies continued to be weak. Additionally, with the stock market deteriorating, some companies preparing for IPOs either abandoned or postponed their listings.

However, securities firms analyze that the recent rise in newly listed stocks is more due to sector-specific differentiation rather than a rebound in the IPO market itself. For example, PIE, an AI vision inspection solution specialist, initially traded below its IPO price on the first day but subsequently hit the upper price limit repeatedly due to expectations that its products would be applied in the independent production process of glass substrates by its client companies. Also, Samyang NChem, a semiconductor photoresist (PR) material specialist, saw its stock price exceed the IPO price following news of product development for glass substrates. Additionally, Asterasys and Dongbang Medical led the upward trend with forecasts of high growth in the beauty medical business focused on exports.

Na Seung-doo, a researcher at SK Securities, said, "Major institutional investors showed strong selling pressure from the first day of listing for companies like Samyang NChem and PIE. Despite such behavior, companies with clear expectations for growth in their end markets showed rapid stock price rebounds."

Jo Dae-hyung, a researcher at DS Investment & Securities, explained, "Day One Company and Meatbox, which faced controversies over IPO overvaluation, have not shown stock price rebounds after listing. However, AI software and beauty medical device companies like Wisnut and Asterasys, which are currently attracting market attention, have shown rapid stock price rebounds, demonstrating that a selective approach based on company fundamentals is effective."

Securities firms expect that if companies lower their valuations to challenge IPOs, an overall positive shift in market sentiment is possible. Researcher Jo emphasized, "Dongbang Medical, which withdrew last year, reduced its public offering volume and proceeded again, showing favorable stock price trends after listing. Ultimately, the conclusion is that the generally high valuations of newly listed stocks are the problem." He added, "Recently, the number of companies withdrawing from preliminary reviews is increasing, but if they proceed with listings at lower valuations, an overall positive turnaround in the IPO market sentiment is expected."