Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

<a href="https://www.smartkarma.com/entities/koreacenter-com-co-ltd" target="_blank" data-smartkarma-citation="entities:28329:1" rel="noopener">Koreacenter.com Co Ltd (290510 KS)</a> is getting ready to complete its IPO in the next few weeks. The IPO price range is 24,000 won to 27,200 won. The IPO base deal size is $51 million to $58 million. According to the bankers' valuation, the expected market cap after the IPO is 616 billion won to 698 billion won. The bookbuilding for the institutional investors starts on October 28th. 
The bankers used five companies including Cafe24, Naver, Kakao, Godaddy, and Amazon as comparable companies valuation analysis. Using the company's annualized sales in 1H19 and applying the P/S multiple of 3.7x (average of the comps), this results in an implied market cap of 898 billion won. After applying an additional IPO discount of 22.3% to 31.4%, this results in an implied market cap of 617 billion won to 653 billion won or implied IPO price range of 24,000 won to 27,200 won. 
The company has four main business units, including TailList, MakeShop, Enuri, and MallTail. In 1H19, TailList accounted for 58.9% of total sales, followed by MakeShop (17%), Enuri (8.6%), and MallTail (7.7%). TailList, which accounted for 39.4% of total sales in 2016, increased to 47.4% in 2017, and 55.3% in 2018. Koreacenter operates TailList which is one of the largest overseas direct e-commerce platforms where many Koreans purchase overseas goods online. Makeshop provides E-commerce shopping mall solutions. 
Many investors will question the fairness of the bankers valuing this company on only P/S basis relative to its peers. This is mainly because Koreacenter generates lower profit margins versus the Korean peers and the valuation of Koreacenter could be negatively impacted if the valuation is based on P/E or EV/EBITDA basis relative to its peers.

Koreacenter.com Co Ltd (290510 KS) is getting ready to complete its IPO in the next few weeks. The IPO price range is 24,000 won to 27,200 won. The IPO base deal size is $51 million to $58 million. According to the bankers' valuation, the expected market cap after the IPO is 616 billion won to 698 billion won. The bookbuilding for the institutional investors starts on October 28th. 
The bankers used five companies including Cafe24, Naver, Kakao, Godaddy, and Amazon as comparable companies valuation analysis. Using the company's annualized sales in 1H19 and applying the P/S multiple of 3.7x (average of the comps), this results in an implied market cap of 898 billion won. After applying an additional IPO discount of 22.3% to 31.4%, this results in an implied market cap of 617 billion won to 653 billion won or implied IPO price range of 24,000 won to 27,200 won. 
The company has four main business units, including TailList, MakeShop, Enuri, and MallTail. In 1H19, TailList accounted for 58.9% of total sales, followed by MakeShop (17%), Enuri (8.6%), and MallTail (7.7%). TailList, which accounted for 39.4% of total sales in 2016, increased to 47.4% in 2017, and 55.3% in 2018. Koreacenter operates TailList which is one of the largest overseas direct e-commerce platforms where many Koreans purchase overseas goods online. Makeshop provides E-commerce shopping mall solutions. 
Many investors will question the fairness of the bankers valuing this company on only P/S basis relative to its peers. This is mainly because Koreacenter generates lower profit margins versus the Korean peers and the valuation of Koreacenter could be negatively impacted if the valuation is based on P/E or EV/EBITDA basis relative to its peers. 

Korea / Special Sits, Pairs, Index Rebalancing, Clepsydra Capital

Sanghyun Park

Korea / Special Sits, Pairs, Index Rebalancing

Koreacenter is Korea's largest eCommerce parcel forwarding service and second largest eCommerce hosting provider. It filed IPO book yesterday. Here are a couple of comments on the key points of this IPO.Details of the IPO book are in the DETAIL section.Bookbuilding strategy &amp; post IPO trade approach will be separately prepared in another post.<div class="content-highlight"><h2>Comments</h2></div><ul>
<li>Offering size is small. It is only 11% of SO, substantially smaller than a usual 30% in Korea. But this is hardly a surprise. It already raised nearly ₩100bil last year through pre-IPO. So, additional funding isn't really critical at this point.</li>
<li>Then, this question comes up. Why are they doing this IPO? Most of the FIs carry lock-up obligations and most of these obligations will stay for a while even after this IPO. So, timing wise, this IPO is a bit weird. This may be why we are hearing this speculation locally. That is, Koreacenter is still in discussion with Kakao over a merger with Kakao Commerce, Kakao's recently spun off subsidiary. To get a fair value before a merger, this IPO may be a good option.</li>
<li>Price wise, a lot of us must be feeling the pressure. The proposed valuation is 60x OP. This'd certainly be an issue to a lot of us. But still there is a quite warm investment sentiment on eCommerce biz. In particular, practically only 10% of SO will be actual float after the IPO. This float level would be enough to excite a quite large number of investors. Here, Kakao Commerce merger talking can be another spur.</li>
</ul>

Koreacenter is Korea's largest eCommerce parcel forwarding service and second largest eCommerce hosting provider. It filed IPO book yesterday. Here are a couple of comments on the key points of this IPO.Details of the IPO book are in the DETAIL section.Bookbuilding strategy &amp; post IPO trade approach will be separately prepared in another post.Comments
Offering size is small. It is only 11% of SO, substantially smaller than a usual 30% in Korea. But this is hardly a surprise. It already raised nearly ₩100bil last year through pre-IPO. So, additional funding isn't really critical at this point.
Then, this question comes up. Why are they doing this IPO? Most of the FIs carry lock-up obligations and most of these obligations will stay for a while even after this IPO. So, timing wise, this IPO is a bit weird. This may be why we are hearing this speculation locally. That is, Koreacenter is still in discussion with Kakao over a merger with Kakao Commerce, Kakao's recently spun off subsidiary. To get a fair value before a merger, this IPO may be a good option.
Price wise, a lot of us must be feeling the pressure. The proposed valuation is 60x OP. This'd certainly be an issue to a lot of us. But still there is a quite warm investment sentiment on eCommerce biz. In particular, practically only 10% of SO will be actual float after the IPO. This float level would be enough to excite a quite large number of investors. Here, Kakao Commerce merger talking can be another spur.


South Korea

Koreacenter.Com Co., Ltd. was founded in 2000. The company's line of business includes providing computer programming services.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Koreacenter.com (290510 KS)

Koreacenter IPO Preview

Koreacenter.com Co Ltd (290510 KS) is getting ready to complete its IPO in the next few weeks. The IPO price range is 24,000 won to 27,200 won. The...

Douglas Kim

Koreacenter IPO: Details & Comments

Koreacenter is Korea's largest eCommerce parcel forwarding service and second largest eCommerce hosting provider. It filed IPO book yesterday. Here...

Sanghyun Park

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)