[Reporter Reading Securities Report] 'Link Solution' with 50% Discount Rate Applied

3D Printer Specialist Prepares for IPO via Technology Exemption
Expected Sales of 20.4 Billion KRW This Year... Projected to Reach 61.5 Billion KRW by 2027
Per-Share Valuation at 40,000 KRW... Discount Rate of 46-53% Applied

Link Solution, a specialized 3D printer company, has submitted a securities registration statement and is preparing for a KOSDAQ listing. Although Link Solution recorded a loss last year, it is expected to quickly improve its performance after turning a profit this year. Notably, the company set the public offering price in a market-friendly manner, applying a discount rate of over 50%.

Link Solution was established in 2015. It develops and sells 3D printer equipment and provides customized services for customers. Based on a platform with high-precision, high-speed printing technology and excellent material compatibility, it contributes to transforming traditional manufacturing methods into smart automated manufacturing methods.

Unlike other technology-specialized companies, Link Solution has achieved relatively favorable performance. Sales revenue, which was 3.8 billion KRW in 2022, reached 7.4 billion KRW in 2023 and 11.2 billion KRW last year. Operating profit was positive in 2022 and 2023, with only a 4 billion KRW operating loss recorded last year. However, net losses have continued.

As the company is listing through a technology-specialized exemption, it used future performance to determine the public offering price, expecting not only sales growth but also a turnaround to operating and net profits starting this year.

The expected sales revenue for this year is 20.4 billion KRW, operating profit 500 million KRW, and net profit 300 million KRW. Next year, sales are projected at 33 billion KRW, operating profit 5.2 billion KRW, and net profit 4.3 billion KRW. By 2027, sales are expected to reach 61.5 billion KRW, with operating profit of 18.1 billion KRW and net profit of 14.1 billion KRW.

The key factor for performance improvement is the increased sales of SLA 3D printers. SLA technology refers to a method of curing liquid photopolymer resin with a laser to build 3D structures layer by layer. Link Solution’s SLA 3D printer offers the world’s largest printing size. It is optimized for rapid production of large products and mass production of small products. Additionally, it boasts advantages such as approximately three times faster speed and lower cost ratio compared to other companies’ 3D printers. With this competitiveness, the company expects sales of SLA 3D printers to increase from 2.2 billion KRW last year to 74.8 billion KRW in 2027.

Furthermore, 3D printing manufacturing sales are also expected to grow from 1.3 billion KRW to 36.9 billion KRW during the same period. The reason is the low cost ratio. The company explained in the securities registration statement, "The main reason customers request 3D printing services from Link Solution is significant cost reduction."

Link Solution’s desired public offering price is between 20,000 and 23,000 KRW. When determining the offering price, the lead manager, Shin Young Securities, and Link Solution used the price-earnings ratio (PER). Comparable companies selected were Model Solution, Proto Labs, and Materialise NV. The reason for selecting these companies is that Link Solution’s business model is almost nonexistent domestically. Among domestic companies, Model Solution and Dentis have generated sales related to prototypes or 3D printers similar to Link Solution. Dentis was excluded due to excessive debt ratio and operating losses.

The average PER of the three comparable companies is 30.08 times. For reference, the PERs of the comparable group are 13.58 times for Model Solution, 55.74 times for Proto Labs, and 20.92 times for Materialise. Using the present value of estimated net profit in 2027, a per-share valuation of 42,313 KRW was calculated. A discount rate of 45.64% to 52.73% was then applied. This is higher than the average discount rate of 25.58% to 38.35% for KOSDAQ technology growth companies after 2024. This can be seen as a market-friendly approach to setting the public offering price.

Link Solution plans to raise 18 billion to 20.7 billion KRW by offering 900,000 shares this time. Based on the lower end of the offering price, 15.5 billion KRW will be used for facility funds and 19.9 billion KRW for operating funds.