Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

<ul>
<li>We remain Bearish on the WCP IPO. Our base case valuation of WCP is implied market cap of 3.0 trillion won and target price of 87,805 won per share.</li>
<li>In this insight, we highlight four additional important considerations to the WCP IPO including comparison to SK IE Technology, 1Q22 earnings comparison, higher IPO discount, and overly optimistic EBITDA estimates. </li>
<li>We would categorize WCP as an excellent company but not exceptional as HPSP. Therefore, the weak market conditions will likely have a negative impact on the WCP IPO pricing.</li>
</ul>


We remain Bearish on the WCP IPO. Our base case valuation of WCP is implied market cap of 3.0 trillion won and target price of 87,805 won per share.
In this insight, we highlight four additional important considerations to the WCP IPO including comparison to SK IE Technology, 1Q22 earnings comparison, higher IPO discount, and overly optimistic EBITDA estimates. 
We would categorize WCP as an excellent company but not exceptional as HPSP. Therefore, the weak market conditions will likely have a negative impact on the WCP IPO pricing.


WCP IPO: Additional Important Considerations

<ul>
<li>Our base case valuation of WCP is EV of 2.4 trillion won, implied market cap of 3.0 trillion won and target price of 87,805 won per share. </li>
<li>Given the lack of upside relative to the IPO price range (80,000 won to 100,000 won), we would PASS on this IPO deal.</li>
<li>We forecast the company to generate revenue of 229.1 billion won (up 23.5% YoY) in 2022. We estimate operating margin of 14.8% in 2022, lower than 21.8% in 2021.</li>
</ul>


Our base case valuation of WCP is EV of 2.4 trillion won, implied market cap of 3.0 trillion won and target price of 87,805 won per share. 
Given the lack of upside relative to the IPO price range (80,000 won to 100,000 won), we would PASS on this IPO deal.
We forecast the company to generate revenue of 229.1 billion won (up 23.5% YoY) in 2022. We estimate operating margin of 14.8% in 2022, lower than 21.8% in 2021.


<ul>
<li>WCP is getting ready for an IPO in Korea in August. This is expected to be one of the largest IPOs in Korea post LG Energy Solution (373220 KS).</li>
<li>The IPO price range is from 80,000 won to 100,000 won. The IPO base deal size is from $560 million to $700 million.</li>
<li>WCP is a leading maker of separators which are key materials used in EV batteries.</li>
</ul>


WCP is getting ready for an IPO in Korea in August. This is expected to be one of the largest IPOs in Korea post LG Energy Solution (373220 KS).
The IPO price range is from 80,000 won to 100,000 won. The IPO base deal size is from $560 million to $700 million.
WCP is a leading maker of separators which are key materials used in EV batteries.


Private Capital Markets

<ul>
<li>WCP is a leading maker of separators which are key materials used in EV batteries.</li>
<li>WCP is a wholly-owned subsidiary of W-Scope in Japan. At the end of 2021, W-Scope Corp (Japan) owned a 49.7% stake in WCP. </li>
<li>The company is expected to complete its IPO in 2022 and the valuation of WCP is expected to be about 3 trillion won to 4 trillion won.</li>
</ul>


WCP is a leading maker of separators which are key materials used in EV batteries.
WCP is a wholly-owned subsidiary of W-Scope in Japan. At the end of 2021, W-Scope Corp (Japan) owned a 49.7% stake in WCP. 
The company is expected to complete its IPO in 2022 and the valuation of WCP is expected to be about 3 trillion won to 4 trillion won.


WCP: Leading Producer of Separators for EV Batteries in Korea

<ul>
<li>Sungeel Hitech is getting ready to complete its IPO in Korea in July. This is one of the market leaders in the recycling of rechargeable battery materials in Korea. </li>
<li>It has experienced excellent growth in sales and profits. It had revenue of 147.3 billion won (up 123.3% YoY) and operating profit of 16.9 billion won in 2021.</li>
<li>The IPO price range is from 40,700 won to 47,500 won. The IPO base deal size ranges from $86 million to $100 million.</li>
</ul>


Sungeel Hitech is getting ready to complete its IPO in Korea in July. This is one of the market leaders in the recycling of rechargeable battery materials in Korea. 
It has experienced excellent growth in sales and profits. It had revenue of 147.3 billion won (up 123.3% YoY) and operating profit of 16.9 billion won in 2021.
The IPO price range is from 40,700 won to 47,500 won. The IPO base deal size ranges from $86 million to $100 million.


South Korea

Samsung SDI Co., Ltd. specializes in developing Lithium Ion Battery (LIB) technology.  The Company also manufactures cathode ray tubes (CRTs) for televisions and computer monitors.  Samsung SDI also produces liquid crystal display (LCD) components and rechargeable batteries for cellular phones , personal digital assistants (PDAs), Energy Storage Systems and solar panels.

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Samsung SDI (006400 KS)

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