Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

We have a positive view of the Settlebank IPO. Our base case valuation of Settlebank suggests market cap of 550 billion won or implied target price of 59,400 won, which is 28% higher than the mid-point of the IPO range of 44,000 won to 49,000 won. This valuation is based on 45.9x its net profit of 12 billion won in 2018, which is 60% premium to the comps' average P/E of 28.7x in 2018. Our valuation of 550 billion won for the company suggests a P/E of 33.2x using our estimated net profit of 16.6 billion won in 2020. Settlebank's monopoly of 97% share in the Korean Simple Cash Payment market (간편현금결제) is the biggest strength of the company. We forecast Settlebank to generate sales of 70.7 billion won in 2019 (up 23.7% YoY) and 86.5 billion won in 2020 (up 22.3% YoY). The company's operating margin averaged 25.5% from 2015 to 2018 and we estimate the company to generate operating margins of 23% in 2019 and 22.5% in 2020.We are including Settlebank in our model portfolio.

We have a positive view of the Settlebank IPO. Our base case valuation of Settlebank suggests market cap of 550 billion won or implied target price of 59,400 won, which is 28% higher than the mid-point of the IPO range of 44,000 won to 49,000 won. This valuation is based on 45.9x its net profit of 12 billion won in 2018, which is 60% premium to the comps' average P/E of 28.7x in 2018. Our valuation of 550 billion won for the company suggests a P/E of 33.2x using our estimated net profit of 16.6 billion won in 2020. Settlebank's monopoly of 97% share in the Korean Simple Cash Payment market (간편현금결제) is the biggest strength of the company. We forecast Settlebank to generate sales of 70.7 billion won in 2019 (up 23.7% YoY) and 86.5 billion won in 2020 (up 22.3% YoY). The company's operating margin averaged 25.5% from 2015 to 2018 and we estimate the company to generate operating margins of 23% in 2019 and 22.5% in 2020.We are including Settlebank in our model portfolio. 

<a href="https://www.smartkarma.com/entities/settlebank-inc" target="_blank" data-smartkarma-citation="entities:28113:1">Settlebank Inc (1370075D KS)</a> is a Korean fintech company which is expected to complete its IPO in the next few weeks. Established in 2000, Settlebank has a monopoly (97% share) in the domestic Simple Cash Payment market. This is one of the most innovative IPOs in the Korean fintech space in the past three years. 
The IPO price band is from 44,000 won to 49,000 won. The IPO base deal size is from $54 million to $60 million. Korea Investment &amp; Securities and Shinhan Investment &amp; Securities are the lead managers in this deal. The book for the institutional investors opens on June 27th. 
In 2018, Simple Cash Payment accounted for 43.4% of sales, followed by Virtual Account (35.8%), and Payment Gateway (14.1%). Simple Cash Payment service revenue increased 106.2% YoY in 2018. Settlebank was the first company in Korea to provide Simple Cash Payment service in 2015.

Settlebank Inc (1370075D KS) is a Korean fintech company which is expected to complete its IPO in the next few weeks. Established in 2000, Settlebank has a monopoly (97% share) in the domestic Simple Cash Payment market. This is one of the most innovative IPOs in the Korean fintech space in the past three years. 
The IPO price band is from 44,000 won to 49,000 won. The IPO base deal size is from $54 million to $60 million. Korea Investment &amp; Securities and Shinhan Investment &amp; Securities are the lead managers in this deal. The book for the institutional investors opens on June 27th. 
In 2018, Simple Cash Payment accounted for 43.4% of sales, followed by Virtual Account (35.8%), and Payment Gateway (14.1%). Simple Cash Payment service revenue increased 106.2% YoY in 2018. Settlebank was the first company in Korea to provide Simple Cash Payment service in 2015.

Settlebank IPO Preview - Monopoly in Simple Cash Payment (간편현금결제) Market in Korea

South Korea

Hecto Financial Co., Ltd. operates as a global fintechnology platform company. The Company provides firm banking, simple cash payment, virtual account relay, escrow, and additional electronic financial services. Hecto Financial also offers financial information relay devices and software development services.

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Hecto Financial (234340 KS)

Settlebank IPO Valuation Analysis

We have a positive view of the Settlebank IPO. Our base case valuation of Settlebank suggests market cap of 550 billion won or implied target price...

Douglas Kim

Settlebank IPO Preview - Monopoly in Simple Cash Payment (간편현금결제) Market in Korea

Settlebank Inc (1370075D KS) is a Korean fintech company which is expected to complete its IPO in the next few weeks. Established in 2000,...

Douglas Kim

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