Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

<div>
<strong>Our base case valuation of the company is 246 billion won in market cap or 44,302 won per share, which represents 44% higher than the high end of the IPO price range of 30,700 won per share. </strong>To derive our base case valuation, we used a P/E multiple of 28.6x (average multiple of the comps) and applied it against our estimated net profit of 8.6 billion won in 2020. </div><div></div><div>BBC has better fundamental financials than its two comps in terms of ROE, sales growth, and operating margins. Therefore, one could argue that BBC should trade at least in-line or even premium multiples to its peers, despite BBC's smaller size relative to LG H&amp;H and Aekyung Industrial. We used <a href="https://www.smartkarma.com/entities/aekyung-industrial-co-ltd" target="_blank" data-smartkarma-citation="entities:27129:1" rel="noopener">Aekyung Industrial Co Ltd (018250 KS)</a> and <a href="https://www.smartkarma.com/entities/lg-household-health-care" target="_blank" data-smartkarma-citation="entities:6501:1" rel="noopener">LG Household &amp; Health Care (051900 KS)</a> as comparable companies to BBC Co. </div><div></div><div><strong>Overall, we have a positive view of the BBC Co IPO. </strong></div>


Our base case valuation of the company is 246 billion won in market cap or 44,302 won per share, which represents 44% higher than the high end of the IPO price range of 30,700 won per share. To derive our base case valuation, we used a P/E multiple of 28.6x (average multiple of the comps) and applied it against our estimated net profit of 8.6 billion won in 2020. BBC has better fundamental financials than its two comps in terms of ROE, sales growth, and operating margins. Therefore, one could argue that BBC should trade at least in-line or even premium multiples to its peers, despite BBC's smaller size relative to LG H&amp;H and Aekyung Industrial. We used Aekyung Industrial Co Ltd (018250 KS) and LG Household &amp; Health Care (051900 KS) as comparable companies to BBC Co. Overall, we have a positive view of the BBC Co IPO. 

<p><strong>Over the years, we have found that the interest levels (as measured by the platform views on Smartkarma) often provide some interesting clues in terms of which IPOs will do well.</strong> In this insight, we provide our insights on the interest level comparisons for the five recent Korean IPOs. We have excluded Kakao Games from this list since IPOs this IPO has a much bigger market cap with much greater interest overall as compared to the five companies mentioned in this insight).</p><p>BBC Co has received the highest interest level (measured in terms of platform views per report) among the five Korean IPOs that we have written about. These platform views are based on the initial IPO Preview report on each of these companies. So if the level of interest in BBC is 100, Wonbangtech is 87, and PIMS is 70. Overall, among these five companies, BBC is likely to receive the highest institutional investors' interest, followed by Wongbangtech, PIMS, Mico Biomed, and Vaiv.   </p><div class="content-highlight"><p>Among the five upcoming small-cap IPOs in Korea, BBC Co and Wonbangtech have received the highest relative interest (in terms of Smartkarma platform views). Among these five companies, these two companies are also probably the most fundamentally sound companies relative to the other three companies. As a result, for the potential investors with some interest in investing in Korean small-cap IPOs, it may be worthwhile to keep this data under consideration and focus their research efforts on BBC Co and Wonbangtech. </p></div>

Over the years, we have found that the interest levels (as measured by the platform views on Smartkarma) often provide some interesting clues in terms of which IPOs will do well. In this insight, we provide our insights on the interest level comparisons for the five recent Korean IPOs. We have excluded Kakao Games from this list since IPOs this IPO has a much bigger market cap with much greater interest overall as compared to the five companies mentioned in this insight).BBC Co has received the highest interest level (measured in terms of platform views per report) among the five Korean IPOs that we have written about. These platform views are based on the initial IPO Preview report on each of these companies. So if the level of interest in BBC is 100, Wonbangtech is 87, and PIMS is 70. Overall, among these five companies, BBC is likely to receive the highest institutional investors' interest, followed by Wongbangtech, PIMS, Mico Biomed, and Vaiv.   Among the five upcoming small-cap IPOs in Korea, BBC Co and Wonbangtech have received the highest relative interest (in terms of Smartkarma platform views). Among these five companies, these two companies are also probably the most fundamentally sound companies relative to the other three companies. As a result, for the potential investors with some interest in investing in Korean small-cap IPOs, it may be worthwhile to keep this data under consideration and focus their research efforts on BBC Co and Wonbangtech. 

Interest Comparisons of Upcoming Korean Small-Cap IPOs: BBC, Wonbangtech, PIMS, Mico Biomed, & Vaiv

<p><strong>BBC Co </strong><strong>("Best Bristle Co")</strong> is getting ready for an IPO to be completed in September. The IPO price range is from 27,100 won to 30,700 won. The IPO base deal size is from $33 million to $37 million. According to the bankers' valuation, the expected market cap after IPO is from 151 billion won to 171 billion won. The book-building for the institutional investors starts on 2 September 2020.</p><p>BBC Co  is the number one leading producer of brush head (bristles) in Korea. The bristles basically refer to the brush part of various items such as the head of the tooth brush. <strong>Currently, BBC Co has nearly 80% market share of the tooth brush head (bristles) in Korea.</strong> Major reasons why the company has such a high market share in this segment is due to the company's superior R&amp;D and product performance. The company has about 38 patents globally for the bristles related products. The company's products are used in a wide range of sectors including in toothbrushes, cosmetics, air purifiers, air conditioners, and other industrial uses.</p><p>The company generated revenue of 31.1 billion won in 2019 (up 16.8% YoY) and 17.4 billion won in 1H 2020 (up 19.1% YoY). Its operating profit also increased nicely to 7.6 billion won in 2019 (up 494% YoY) and 4.9 billion won in 1H 2020 (up 34.2% YoY).</p>

BBC Co ("Best Bristle Co") is getting ready for an IPO to be completed in September. The IPO price range is from 27,100 won to 30,700 won. The IPO base deal size is from $33 million to $37 million. According to the bankers' valuation, the expected market cap after IPO is from 151 billion won to 171 billion won. The book-building for the institutional investors starts on 2 September 2020.BBC Co  is the number one leading producer of brush head (bristles) in Korea. The bristles basically refer to the brush part of various items such as the head of the tooth brush. Currently, BBC Co has nearly 80% market share of the tooth brush head (bristles) in Korea. Major reasons why the company has such a high market share in this segment is due to the company's superior R&amp;D and product performance. The company has about 38 patents globally for the bristles related products. The company's products are used in a wide range of sectors including in toothbrushes, cosmetics, air purifiers, air conditioners, and other industrial uses.The company generated revenue of 31.1 billion won in 2019 (up 16.8% YoY) and 17.4 billion won in 1H 2020 (up 19.1% YoY). Its operating profit also increased nicely to 7.6 billion won in 2019 (up 494% YoY) and 4.9 billion won in 1H 2020 (up 34.2% YoY).

South Korea

Leading producer of brush head (bristles) in Korea.

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