Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

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We recommend investors to pass on the Motrex IPO deal. The IPO price range is 31,200 won to 38,300 won. At the low IPO price range, this would suggest market cap of 174 billion won. A key comparison of Motrex is <a href="https://www.smartkarma.com/entities/6089" target="_blank" data-smartkarma-citation="entities:6089:1">Hyundai Mobis Co Ltd (012330 KS)</a>, which is trading at 8x P/E (2017). When you could buy Hyundai Mobis at 8x P/E, why would investors want to buy Motrex at more than 8x P/E?</li>
<li>Despite the rosy industry growth projections for navigation, audio system, and various in-vehicle infotainment (IVI)…</li>
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We recommend investors to pass on the Motrex IPO deal. The IPO price range is 31,200 won to 38,300 won. At the low IPO price range, this would suggest market cap of 174 billion won. A key comparison of Motrex is Hyundai Mobis Co Ltd (012330 KS), which is trading at 8x P/E (2017). When you could buy Hyundai Mobis at 8x P/E, why would investors want to buy Motrex at more than 8x P/E?
Despite the rosy industry growth projections for navigation, audio system, and various in-vehicle infotainment (IVI)…


<ul><li>Motrex is auto parts company which is expected to complete its IPO in July. </li><li>Motrex specializes in navigation, audio system, and various in-vehicle infotainment (IVI) products. Motrex has been an innovator in the port installed option (PIO) market related to the vehicle navigation system. Major competitors to Motrex include <a href="https://www.smartkarma.com/entities/6089" target="_blank" data-smartkarma-citation="entities:6089:1">Hyundai Mobis Co Ltd (012330 KS)</a> and <a href="https://www.smartkarma.com/entities/8814" target="_blank" data-smartkarma-citation="entities:8814:1">LG Electronics Inc (066570 KS)</a> in supplying in-vehicle infotainment (IVI) products. </li><li>Exports represented 93.5% of its total revenue and domestic sales represented the remaining 6.5% of revenue in 2016. The company's sales increased 19.2% CAGR from 2013 to 2016. The company's operating margin averaged 11.5% in 2013 to 2016. </li><li>Vehicle infotainment products are likely to benefit from the growth of autonomous and connected vehicles, as some consumers are willing to pay extra for vehicles that have more advanced IVI features in the connected and autonomous vehicles. Motrex has been able to increase market share of the AV/AVN products sold to Hyundai Motors and Kia Motor in the past several years, increasing from 6.1% in 2014 to 9.5% in 2015, and 13.8% in 2016. </li></ul>

Motrex is auto parts company which is expected to complete its IPO in July. Motrex specializes in navigation, audio system, and various in-vehicle infotainment (IVI) products. Motrex has been an innovator in the port installed option (PIO) market related to the vehicle navigation system. Major competitors to Motrex include Hyundai Mobis Co Ltd (012330 KS) and LG Electronics Inc (066570 KS) in supplying in-vehicle infotainment (IVI) products. Exports represented 93.5% of its total revenue and domestic sales represented the remaining 6.5% of revenue in 2016. The company's sales increased 19.2% CAGR from 2013 to 2016. The company's operating margin averaged 11.5% in 2013 to 2016. Vehicle infotainment products are likely to benefit from the growth of autonomous and connected vehicles, as some consumers are willing to pay extra for vehicles that have more advanced IVI features in the connected and autonomous vehicles. Motrex has been able to increase market share of the AV/AVN products sold to Hyundai Motors and Kia Motor in the past several years, increasing from 6.1% in 2014 to 9.5% in 2015, and 13.8% in 2016. 

South Korea

Motrex Co.,Ltd manufactures automobile electronic equipment. The Company produces and sells automotive parts, automotive audio, automotive navigation, remote control devices, and other products. Motrex markets its products worldwide.

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Motrex Co.,Ltd (118990 KS)

Motrex IPO Preview - Valuation Analysis

We recommend investors to pass on the Motrex IPO deal. The IPO price range is 31,200 won to 38,300 won. At the low IPO price range, this would...

Douglas Kim

Motrex IPO Preview (Part 1)

Motrex is auto parts company which is expected to complete its IPO in July. Motrex specializes in navigation, audio system, and various...

Douglas Kim

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