Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

The institutional investors book building for the <a href="https://www.smartkarma.com/entities/afw-co-ltd" target="_blank" data-smartkarma-citation="entities:28096:1">AFW Co Ltd (312610 KS)</a> IPO will start on June 12th. <a href="https://www.smartkarma.com/entities/28096" target="_blank" data-smartkarma-citation="entities:28096:1">AFW Co Ltd (312610 KS)</a> specializes in making electric vehicle (EV) and industrial equipment components including cathode friction welding (rivet) terminals.Our base case valuation is to use the comps' mid-point EV/EBIT multiple of 14.7x in 2020 and after apply it to our estimated EBIT of 10.7 billion won in 2020, resulting in an EV of 156.7 billion won and implied market cap of 193.6 billion won (adjusting for net cash, including net proceeds from 2.06 million new shares issued in the IPO). This results in an one-year implied price target of 18,757 won, which is 11% below the mid-point of the bankers' IPO price range (21,000 won). As such, we would AVOID this deal since there is further downside risk from the IPO price range.

The institutional investors book building for the AFW Co Ltd (312610 KS) IPO will start on June 12th. AFW Co Ltd (312610 KS) specializes in making electric vehicle (EV) and industrial equipment components including cathode friction welding (rivet) terminals.Our base case valuation is to use the comps' mid-point EV/EBIT multiple of 14.7x in 2020 and after apply it to our estimated EBIT of 10.7 billion won in 2020, resulting in an EV of 156.7 billion won and implied market cap of 193.6 billion won (adjusting for net cash, including net proceeds from 2.06 million new shares issued in the IPO). This results in an one-year implied price target of 18,757 won, which is 11% below the mid-point of the bankers' IPO price range (21,000 won). As such, we would AVOID this deal since there is further downside risk from the IPO price range.  

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<li>
<a href="https://www.smartkarma.com/entities/28096" target="_blank" data-smartkarma-citation="entities:28096:1">AFW Co Ltd (312610 KS)</a> is a company that is expected to complete its IPO in the Korean stock market in June. Established in 1998, AFW specializes in making electric vehicle (EV) and industrial equipment components. Major customers of the company include Samsung SDI, Doosan Infracore, and Volvo Construction Equipment.</li>
<li>The company expects to raise about $64 million to $74 million in this IPO. The IPO deal size is 3.92 million shares (new shares - 2.06 million shares and old shares - 1.86 million shares). One of the concerns of the IPO is the fact that the company is selling 38% of the expected fully diluted shares outstanding, which is relatively high. </li>
<li>The bankers used the net profit of AFW from 2Q18 to 1Q19 (8.8 billion won) and applied the comps' average P/E (32.1x) to derive an implied market cap of 281 billion won. After applying an additional IPO discount of 17.5% to 28.5% to derive IPO valuation range of 19,500 won to 22,500 won.      
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AFW Co Ltd (312610 KS) is a company that is expected to complete its IPO in the Korean stock market in June. Established in 1998, AFW specializes in making electric vehicle (EV) and industrial equipment components. Major customers of the company include Samsung SDI, Doosan Infracore, and Volvo Construction Equipment.
The company expects to raise about $64 million to $74 million in this IPO. The IPO deal size is 3.92 million shares (new shares - 2.06 million shares and old shares - 1.86 million shares). One of the concerns of the IPO is the fact that the company is selling 38% of the expected fully diluted shares outstanding, which is relatively high. 
The bankers used the net profit of AFW from 2Q18 to 1Q19 (8.8 billion won) and applied the comps' average P/E (32.1x) to derive an implied market cap of 281 billion won. After applying an additional IPO discount of 17.5% to 28.5% to derive IPO valuation range of 19,500 won to 22,500 won.      



South Korea

A.F.W Co,. Ltd manufactures and distributes industrial batteries and parts. The Company produces electric vehicles li-ion battery terminals, li-ion battery terminal drill rods, and other related products. A.F.W also produces drilling equipment, machinery parts, friction welding, and other related products.

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AFW Co Ltd (312610 KS)

AFW Co IPO Valuation Analysis

The institutional investors book building for the AFW Co Ltd (312610 KS) IPO will start on June 12th. AFW Co Ltd (312610 KS) specializes in making...

Douglas Kim

AFW Co IPO Preview

AFW Co Ltd (312610 KS) is a company that is expected to complete its IPO in the Korean stock market in June. Established in 1998, AFW specializes...

Douglas Kim

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