Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

Xi S&amp;D Inc provides smart home services, including installing electronic home security systems and it also provides on-site apartment maintenance and property management services. <a href="https://www.smartkarma.com/entities/gs-engineering-construct" target="_blank" data-smartkarma-citation="entities:15916:1" rel="noopener">Gs Engineering &amp; Construct (006360 KS)</a> owns a 91.1% stake of Xi S&amp;D Inc prior to the IPO. Xi S&amp;D Inc is planning to raise about $31 million to $38 million in this IPO at 4,200 won to 5,200 won IPO price range in the Korean stock market. The company has recorded excellent growth in sales and profits in the past five years. From 2014 to 2018, the company's sales increased by 28.7% CAGR and its operating profit increased by 64% CAGR. The company's operating margin averaged 6.0% from 2014 to 2018. In 1H19, Xi S&amp;D's revenue increased by 39.6% YoY to 133.3 billion won. However, its operating profit rose only 10.9% YoY to 7.8 billion won in 1H19. How the Bankers Priced the IPO - The bankers used four companies including S-1 Corp, HDC I Controls, Kocom, and SK D&amp;D  as comps to Xi S&amp;D Inc. The bankers used the annual net profit in 2018 and 1H19 (annualized) for the P/E calculation. The average P/E of the comps is 15.23 (using 2018 net profit) and 14.33 (using 1H19 annualized net profit). The bankers then applied Xi S&amp;D's net profit in 2018 and 1H19 on these P/E multiples to derive an implied price (pre-IPO discount) of 6,132 won per share. After applying additional IPO discount of 15-30%, this results in an IPO price range of 4,200 won per share (market cap of 112 billion won) to 5,200 won per share (market cap of 139 billion won).

Xi S&amp;D Inc provides smart home services, including installing electronic home security systems and it also provides on-site apartment maintenance and property management services. Gs Engineering &amp; Construct (006360 KS) owns a 91.1% stake of Xi S&amp;D Inc prior to the IPO. Xi S&amp;D Inc is planning to raise about $31 million to $38 million in this IPO at 4,200 won to 5,200 won IPO price range in the Korean stock market. The company has recorded excellent growth in sales and profits in the past five years. From 2014 to 2018, the company's sales increased by 28.7% CAGR and its operating profit increased by 64% CAGR. The company's operating margin averaged 6.0% from 2014 to 2018. In 1H19, Xi S&amp;D's revenue increased by 39.6% YoY to 133.3 billion won. However, its operating profit rose only 10.9% YoY to 7.8 billion won in 1H19. How the Bankers Priced the IPO - The bankers used four companies including S-1 Corp, HDC I Controls, Kocom, and SK D&amp;D  as comps to Xi S&amp;D Inc. The bankers used the annual net profit in 2018 and 1H19 (annualized) for the P/E calculation. The average P/E of the comps is 15.23 (using 2018 net profit) and 14.33 (using 1H19 annualized net profit). The bankers then applied Xi S&amp;D's net profit in 2018 and 1H19 on these P/E multiples to derive an implied price (pre-IPO discount) of 6,132 won per share. After applying additional IPO discount of 15-30%, this results in an IPO price range of 4,200 won per share (market cap of 112 billion won) to 5,200 won per share (market cap of 139 billion won). 

South Korea

Xi S&D, Inc. is a home security service provider. The Company installs home network and information technology for electronic home security systems. Xi S&D also provides on-site maintenance services.

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Xi S&D Inc (317400 KS)

Xi S&D Inc IPO Preview

Xi S&D Inc provides smart home services, including installing electronic home security systems and it also provides on-site apartment...

Douglas Kim

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