[Reporter’s Securities Filing Review] ITChem to Expand Facility Investment Through IPO

Specialized Producer of Pharmaceutical and Electronic Materials
OLED Plant to Operate This Year, Pharmaceutical Plant Next Year
"Expecting Sales Expansion"

ITChem has submitted its securities registration statement and officially begun the initial public offering (IPO) process. The company plans to invest most of the funds raised through this public offering in expanding new production facilities. Through this facility investment, ITChem expects its sales to increase significantly starting in 2026.

Founded in 2005, ITChem develops high value-added fine chemical materials such as active pharmaceutical ingredients (APIs), pharmaceutical intermediates, and organic light-emitting diode (OLED) materials, based on its precision synthesis and purification technologies. An interesting aspect is that the company operates in both the pharmaceutical and OLED materials industries. However, its main focus is on the pharmaceutical raw materials sector, which accounted for 61% of total sales last year.

The company cites quality as one of its strengths. ITChem has established an integrated quality system covering the entire cycle from research and development, pilot production, mass production, quality control, product delivery, to after-sales service. Through this, the company has not only obtained K-GMP certification but also achieved an S grade in the process safety management (PMS) sector. ITChem also emphasizes its record of over 1,100 days without an accident and zero nonconformities as of 2024.

The company’s performance has been steadily improving. On a consolidated basis, sales increased from 37,755,780,000 KRW to 62,173,870,000 KRW last year. Operating profit rose from 579,350,000 KRW to 6,398,670,000 KRW. However, in the first quarter of this year, sales were 16,868,270,000 KRW and there was an operating loss of 90,230,000 KRW. For reference, ITChem is preparing to go public through a 'Tesla listing' (special listing for companies with unrealized profits).

The method ITChem used to determine its offering price was the enterprise value to EBITDA ratio (EV/EBITDA). EV/EBITDA is mainly used to assess the value of manufacturing companies with large-scale facilities. The peer group selected for comparison includes ST Pharm, Lake Materials, Chemtrous, and Polaris AI Pharma. Their average EV/EBITDA is 24.90 times. Based on this, the calculated per-share valuation is 20,996 KRW.

ITChem used this year's estimated EBITDA to calculate the valuation. The reason is that the company expects significant sales growth to become possible this year. In its securities registration statement, the company explained, "According to ITChem’s business plan, the OLED production facility (Goesan Plant 1) will be completed within 2025," and "OLED materials sales are expected to increase further as a result."

ITChem applied a discount rate of 23.32% to 30.94% to the per-share valuation, resulting in a desired offering price range of 14,500 to 16,100 KRW. This is somewhat lower than the average discount rate of 24.68% to 37.48% for non-bio special listing companies on KOSDAQ since 2022.

Through this public offering, the company will issue 2 million new shares. ITChem plans to raise between 29 billion and 32.2 billion KRW through this process. Based on the lower end of the offering price, 25,096,000,000 KRW will be used for expanding facilities at the Goesan plant. The new facility will be dedicated to pharmaceuticals. This plant is expected to begin full-scale operations in the second half of 2026. The company anticipates that, if operations proceed as planned, sales of active pharmaceutical ingredients will increase significantly starting in the fourth quarter of 2026.