Korea / Special Situations, Clepsydra Capital

Sanghyun Park

I investigate special situations in Korea.

Korea / Special Situations

SD Biosensor IPO: Improving Investor Sentiment & Valuation Rerating

SD Biosensor Bookbuilding Results: The First Case of Disclosing Lockup Info in Detail

SD Biosensor IPO: Offering Detail, Valuation Issue, & Index Fast Entry Possibilities

Korea / Special Sits, Pairs, Index Rebalancing

Clepsydra Capital

Investigate special situations, pairs, and index rebalancing trades in Korea.

Equity Capital Markets

Offering price &amp; sizeSD Biosensor lowered its IPO price from ₩66,000~85,000 to ₩45,000~52,000. This is a nearly 40% decrease from the previous price band. The newly adjusted price band now implies a market cap range at ₩4.57~5.28T.









Indicative price band
Low, previous
High, previous
Low, adjusted
High, adjusted


Price
₩66,000
₩85,000
₩45,000
₩52,000


Offering value
₩1,026.5B
₩1,322.0B
₩559.9B
₩647.0B


- Institutional allotment
₩564.6B
₩727.1B
₩307.9B
₩355.8B


Implied market cap
₩6,843.3B
₩8,813.3B
₩4,572.6B
₩5,283.9B

Source: DART

We also see a substantial decrease in the offering size, nearly halving the total offering value to ₩560~647B.







Offering size
Previous
Adjusted


Pre-IPO SO
93,317,753
93,317,753


Offering
15,552,900
12,442,200


- % of SO
16.67%
13.33%


Institutional allotment
55.00~75.00%
55.00~75.00%


Primary
10,368,600
8,294,800


- % of the total offering
66.67%
66.67%


Secondary
5,184,300
4,147,400


 - % of the total offering
33.33%
33.33%


Post-IPO shares outstanding
103,686,353
101,612,553


Capital increase rate
11.11%
8.89%


Dilution
10.00%
8.16%

Source: DART

ScheduleThe IPO schedule has also been delayed by a month. The company will open the book on July 5 to finalize the offering price on July 7. Then, SD Biosensor proceeds with the subscription on July 8.





Timetable

Book open
2021. 7. 5


Book close
2021. 7. 6


Subscription
2021. 7. 8


Payment
2021. 7. 13


Listing
TBA

Source: DART

ValuationSD Biosensor added local peers (Humasis, Labgenomics, and Bioneer) with relatively low PERs to the valuation comps. This led to a reduction of the offering price by up to 40%. As a result, the adjusted average PER is 14.64x, down 23.31% from the previous average PER of 19.09x.











Valuation peers
Seegene Inc
Thermo Fisher Scientific Inc.
PerkinElmer, Inc.
Humasis Co Ltd
Labgenomics Co Ltd
Bioneer Corp


Ticker
096530
TMO
PKI
205470
084650
064550


Currency
KRW
USD
USD
KRW
KRW
KRW


FY20 earnings (in millions)
₩503,147
$6,375
$728
₩20,937
₩42,764
₩59,188


Total shares
52,225,994
393,793,362
112,061,794
34,194,111
11,322,125
25,211,579


EPS
₩9,634
$16.19
$6.50
₩612
₩3,777
₩2,348


Reference share price
₩61,600
$441.00
$138.80
₩12,000
₩21,695
₩17,540


PER
6.39x
27.24x
21.37x
19.60x
5.74x
7.47x


Average PER
14.64x

Source: DART

Applying the adjusted earnings multiple of 14.64x to SD Biosensor's FY2020 earnings gives an ₩87,635 price per share, putting the indicative price band discount at 40.66~48.65%.





SD Biosensor PER valuation

Ticker
137310


Currency
KRW


FY20 earnings (in millions)
₩615,636


Total shares
102,818,553


EPS
₩5,988


Reference share price
₩87,635


PER
14.64x


 - The indicative band discount
40.66~48.65%

Source: DART



SD Biosensor Offering Price/Size Adjustment & Valuation Re-Review