Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

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<p>Our base case valuation of Enchem is implied market cap of 904 billion won or 55,777 won per share, which is 59% higher than the high end of the IPO price range of 35,000 won per share. Given the strong upside, we have a POSITIVE view of the Enchem IPO and we would subscribe to the IPO deal. Our valuation sensitivity analysis suggests a low-how value of 45,179 won to 67,490 won per share. </p>
<p>Our base case valuation is based on a P/E of 45.7x our estimated net profit of 20 billion won in 2022. Our valuation multiple of 45.7x P/E is based on a 10% discount to the average P/E valuation multiple of the peers in 2022. We have used a 10% discount mainly due to lower operating margin of the company versus its peers as well as due to size factor of lower market cap of the company as compared to its comps. </p>
<p><em>Enchem's<a href="http://www.ipo38.co.kr/ipo/index.htm?o=v&amp;key=6&amp;no=1714&amp;l=&amp;page=1" target="_blank" rel="noopener"> gray market price</a> is trading at around 71,000 won per share, which is more than 100% higher than the high end of the IPO price of 35,000 won per share. </em></p>
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Our base case valuation of Enchem is implied market cap of 904 billion won or 55,777 won per share, which is 59% higher than the high end of the IPO price range of 35,000 won per share. Given the strong upside, we have a POSITIVE view of the Enchem IPO and we would subscribe to the IPO deal. Our valuation sensitivity analysis suggests a low-how value of 45,179 won to 67,490 won per share. 
Our base case valuation is based on a P/E of 45.7x our estimated net profit of 20 billion won in 2022. Our valuation multiple of 45.7x P/E is based on a 10% discount to the average P/E valuation multiple of the peers in 2022. We have used a 10% discount mainly due to lower operating margin of the company versus its peers as well as due to size factor of lower market cap of the company as compared to its comps. 
Enchem's gray market price is trading at around 71,000 won per share, which is more than 100% higher than the high end of the IPO price of 35,000 won per share. 


<p><a href="https://www.smartkarma.com/entities/enchem-co-ltd" target="_blank" data-smartkarma-citation="entities:34297:1" rel="noopener">Enchem (348370 KS) </a>is getting ready to complete its IPO in Korea in the next several weeks. The IPO price range is between 30,000 won and 35,000 won. The IPO base deal size is from $57 million to $67 million. According to the bankers' valuation, the expected market cap of the company post IPO is from 486 billion won to 567 billion won. The book building for the institutional investors starts on 15 October. The lead bankers on this deal include Daishin Securities and Shinhan Investment Securities. </p><table class="table table-striped">
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<td style="width: 181pt;"><div>Deal Specifics of Enchem IPO</div></td>
<td style="width: 287pt;"> </td>
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<td>Lead underwriters of the IPO: </td>
<td style="width: 287pt;">Daishin Securities, Shinhan Investment Securities</td>
</tr>
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<td>Expected IPO price per share: </td>
<td style="width: 287pt;">30,000 won (low)/35,000 won (high)</td>
</tr>
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<td>Number of Shares for IPO:</td>
<td style="width: 287pt;">2.26m shares (new shares)</td>
</tr>
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<td>IPO base deal size: </td>
<td style="width: 287pt;">US$57mn (low);  US$67mn (high)</td>
</tr>
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<td>Expected common shares outstanding, fully diluted (post-IPO):  </td>
<td style="width: 287pt;">16.2m shares</td>
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<td>Expected market cap after IPO:</td>
<td style="width: 287pt;">486 billion won (low)/567 billion won (high)</td>
</tr>
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<td>Book open: </td>
<td style="text-align: left; width: 287pt;">15-Oct-21</td>
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<td>Book closed:</td>
<td style="text-align: left; width: 287pt;">18-Oct-21</td>
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<td>Listing date: </td>
<td style="text-align: left; width: 287pt;">TBC</td>
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<td>Source: Company data</td>
<td style="width: 287pt;"> </td>
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</table><p>Established in 2012, Enchem specializes in the development and manufacturing of electrolytes and high functionality additives for rechargeable batteries and (electric double layer capacitors) EDLCs. Electrolyte is one of the core materials of rechargeable batteries. Enchem was the first company in Korea to successfully commercialize electrolyte for electric vehicles. Major customers include LG Energy Solution, SK Innovation, and CATL. The company sells its products to three of the top five largest makers of rechargeable batteries in the world. </p>

Enchem (348370 KS) is getting ready to complete its IPO in Korea in the next several weeks. The IPO price range is between 30,000 won and 35,000 won. The IPO base deal size is from $57 million to $67 million. According to the bankers' valuation, the expected market cap of the company post IPO is from 486 billion won to 567 billion won. The book building for the institutional investors starts on 15 October. The lead bankers on this deal include Daishin Securities and Shinhan Investment Securities. 






Deal Specifics of Enchem IPO
 


Lead underwriters of the IPO: 
Daishin Securities, Shinhan Investment Securities


Expected IPO price per share: 
30,000 won (low)/35,000 won (high)


Number of Shares for IPO:
2.26m shares (new shares)


IPO base deal size: 
US$57mn (low);  US$67mn (high)


Expected common shares outstanding, fully diluted (post-IPO):  
16.2m shares


Expected market cap after IPO:
486 billion won (low)/567 billion won (high)


Book open: 
15-Oct-21


Book closed:
18-Oct-21


Listing date: 
TBC


Source: Company data
 


Established in 2012, Enchem specializes in the development and manufacturing of electrolytes and high functionality additives for rechargeable batteries and (electric double layer capacitors) EDLCs. Electrolyte is one of the core materials of rechargeable batteries. Enchem was the first company in Korea to successfully commercialize electrolyte for electric vehicles. Major customers include LG Energy Solution, SK Innovation, and CATL. The company sells its products to three of the top five largest makers of rechargeable batteries in the world. 

South Korea

ENCHEM Co.,Ltd. produces and sells electrolyte and functional additives. The Company develops, manufactures and markets lithium rechargeable batteries electrolytes, polymer batteries electrolytes, high functionality additives, and other products. ENCHEM markets its products primarily throughout Korea with limited overseas.

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Enchem (348370 KS)

Enchem IPO Valuation Analysis

Our base case valuation of Enchem is implied market cap of 904 billion won or 55,777 won per share, which is 59% higher than the high end of the...

Douglas Kim

Enchem IPO Preview

Enchem is getting ready to complete its IPO in Korea in the next several weeks. The expected market cap of the company post IPO is from 486 billion...

Douglas Kim

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