Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

<ul>
<li>We are positive on the Robotis IPO. Our base case valuation of Robotis is an implied market cap of 141 billion won (12,538 won per share), which represents a 22% upside from the mid-point of the bankers' IPO price range (10,250 won). As such, we like this deal. We believe this IPO represents a modest amount of capital appreciation potential.</li>
<li>Our base case valuation assumes a net profit estimate of 4.7 billion won in 2019, which is 43% below the company's own net profit forecast. This valuation is also based on 30x P/E, which is higher than the average P/E (using 2017 net profit) of 23x for the comps. We believe this is a fair valuation for the company mainly because of the company's stronger growth potential versus its peers combined with the investment and partnership of LG Electronics in the company. In January 2018, LG Electronics paid 9 billion won for a 10.1% stake in Robotis, putting a private market value of 89 billion won on the company. Given LG Electronics' major thrust into the robotic business, having this kind of partnership is a strong benefit for Robotis. </li>
<li>The company provided detailed financial estimates of the company's income statement from 2018 to 2021. It is not typical of companies in Korea that are trying to complete IPOs to provide this kind of detailed financial projections. Many companies in Korea that are trying to complete their IPOs do not provide any guidance for future financial projections at all. We would estimate that perhaps one out of 10 companies that are trying to complete their IPOs in Korea provide this kind of future financial projections. </li>
</ul>


We are positive on the Robotis IPO. Our base case valuation of Robotis is an implied market cap of 141 billion won (12,538 won per share), which represents a 22% upside from the mid-point of the bankers' IPO price range (10,250 won). As such, we like this deal. We believe this IPO represents a modest amount of capital appreciation potential.
Our base case valuation assumes a net profit estimate of 4.7 billion won in 2019, which is 43% below the company's own net profit forecast. This valuation is also based on 30x P/E, which is higher than the average P/E (using 2017 net profit) of 23x for the comps. We believe this is a fair valuation for the company mainly because of the company's stronger growth potential versus its peers combined with the investment and partnership of LG Electronics in the company. In January 2018, LG Electronics paid 9 billion won for a 10.1% stake in Robotis, putting a private market value of 89 billion won on the company. Given LG Electronics' major thrust into the robotic business, having this kind of partnership is a strong benefit for Robotis. 
The company provided detailed financial estimates of the company's income statement from 2018 to 2021. It is not typical of companies in Korea that are trying to complete IPOs to provide this kind of detailed financial projections. Many companies in Korea that are trying to complete their IPOs do not provide any guidance for future financial projections at all. We would estimate that perhaps one out of 10 companies that are trying to complete their IPOs in Korea provide this kind of future financial projections. 


Robotis IPO Preview (Part 2) - Valuation Analysis

<ul>
<li>
<a href="https://www.smartkarma.com/entities/27456" target="_blank" data-smartkarma-citation="entities:27456:1">Robotis (108490 KS)</a> is an IPO in Korea that is expected to be completed in October 2018. Established in 1999, Robotis provides various robotic solutions and platforms including actuators for building robots that are used in education, DIY, or research sectors. It also provides miniature humanoid robotic platforms, and various 3D humanoid kits. Robotis has numerous global clients including LG Electronics, Google, and Disney.
</li>
<li>The IPO price range is from 9,200 won to 11,300 won. The company is issuing 1.7m new shares. It is expected to raise between 16 billion won to 19 billion won from this IPO. The institutional investors bookbuilding starts on October 10th.  </li>
<li>The company has three main business units including 1) robotic solution, 2) edutainment robot, and 3) robot platform. The major products of its solution business unit include the Dynamixel robot actuator module, the intelligent software, and the service robots. The edutainment robot business unit sells service robotic building solution in the form of artificial intelligence education and in the form of an educational curriculum (Robotis Ollo and others). </li>
</ul>



Robotis (108490 KS) is an IPO in Korea that is expected to be completed in October 2018. Established in 1999, Robotis provides various robotic solutions and platforms including actuators for building robots that are used in education, DIY, or research sectors. It also provides miniature humanoid robotic platforms, and various 3D humanoid kits. Robotis has numerous global clients including LG Electronics, Google, and Disney.

The IPO price range is from 9,200 won to 11,300 won. The company is issuing 1.7m new shares. It is expected to raise between 16 billion won to 19 billion won from this IPO. The institutional investors bookbuilding starts on October 10th.  
The company has three main business units including 1) robotic solution, 2) edutainment robot, and 3) robot platform. The major products of its solution business unit include the Dynamixel robot actuator module, the intelligent software, and the service robots. The edutainment robot business unit sells service robotic building solution in the form of artificial intelligence education and in the form of an educational curriculum (Robotis Ollo and others). 


Robotis IPO Preview (Part 1) - An Innovative Provider of Robotic Solutions in Korea

South Korea

Robotis Co.,Ltd. manufactures and distributes robotics machines. The Company produces educational robotics, smart actuators, and other related products. Robotis markets its products throughout South Korea.

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Robotis (108490 KS)

Robotis IPO Preview (Part 2) - Valuation Analysis

We are positive on the Robotis IPO. Our base case valuation of Robotis is an implied market cap of 141 billion won (12,538 won per share), which...

Douglas Kim

Robotis IPO Preview (Part 1) - An Innovative Provider of Robotic Solutions in Korea

Robotis (108490 KS) is an IPO in Korea that is expected to be completed in October 2018. Established in 1999, Robotis provides various robotic...

Douglas Kim

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52-week Range

Market Cap (USDm)

P/E

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