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

South Korea

RS Automation Co.,Ltd. operates as an automation equipment manufacturing company. The Company offer automation equipment manufacturing, automation equipment designing, automation equipment selling, and other services. RS Automation serves customers worldwide.

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RS Automation (140670 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

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