Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Nearly 30 years of experience in the Korean/Asian equity research. Major sectors coverage include the following:
- Technology 
- Consumer 
- Special Situations/Deep Value Plays
- Tender Offers/M&As
- Holdcos/Stubs
- Asian Unicorns/Private Companies

Korea/Asia, Events, IPOs

Equity Capital Markets

<a href="https://www.smartkarma.com/entities/solu-m-co-ltd" target="_blank" data-smartkarma-citation="entities:31092:1" rel="noopener">Solu-M Co Ltd (248070 KS), </a> which was spun off from <a href="https://www.smartkarma.com/entities/samsung-electro-mechanics-co" target="_blank" data-smartkarma-citation="entities:539:1" rel="noopener">Samsung Electro Mechanics Co, Ltd. (009150 KS)</a> (SEMCO) in 2015, is getting ready to complete its IPO in KOSPI in early February 2021. The company's major products include power modules, electronic shelf label (ESL), 3 in 1 boards for TV parts, and IoT products. This is a fairly decent sized IPO with solid fundamentals. The IPO base deal size ranges from $80 million to $90 million. According to the bankers' valuation, the expected market cap after the IPO ranges from 685 billion won to 775 billion won. The book building for the institutional investors starts on January 14th, 2021. How the Bankers Priced the IPO - The bankers used five companies including Hansol Technis, Powernet, and Silicon Works as comps to Solu-M. The bankers annualized the net profit of the comps (using the controlling interest net profit figures from 1Q-3Q 2020). The average P/E of the comps is 23.4x. The bankers then took Solu-M's annualized net profit in 2020 and applied this P/E multiple to derive an implied market cap of 1,059 billion won (21,182 won implied price). After applying IPO discount of 27.0% to 35.5%, the implied price range is from 13,700 won to 15,500 won.

Solu-M Co Ltd (248070 KS),  which was spun off from Samsung Electro Mechanics Co, Ltd. (009150 KS) (SEMCO) in 2015, is getting ready to complete its IPO in KOSPI in early February 2021. The company's major products include power modules, electronic shelf label (ESL), 3 in 1 boards for TV parts, and IoT products. This is a fairly decent sized IPO with solid fundamentals. The IPO base deal size ranges from $80 million to $90 million. According to the bankers' valuation, the expected market cap after the IPO ranges from 685 billion won to 775 billion won. The book building for the institutional investors starts on January 14th, 2021. How the Bankers Priced the IPO - The bankers used five companies including Hansol Technis, Powernet, and Silicon Works as comps to Solu-M. The bankers annualized the net profit of the comps (using the controlling interest net profit figures from 1Q-3Q 2020). The average P/E of the comps is 23.4x. The bankers then took Solu-M's annualized net profit in 2020 and applied this P/E multiple to derive an implied market cap of 1,059 billion won (21,182 won implied price). After applying IPO discount of 27.0% to 35.5%, the implied price range is from 13,700 won to 15,500 won.

Samsung Electro Mechanics Co, Ltd. (009150 KS)

Solu-M Co Ltd

Solu-M Co IPO Preview