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

Settlebank IPO Preview - Monopoly in Simple Cash Payment (간편현금결제) Market in Korea

Equity Capital Markets

<div class="content-highlight"><p>Our base case valuation of Aton Inc is 168 billion won or 38,498 won per share. This is within the IPO price range of the company which is from 30,000 won to 43,000 won. Therefore, unless the IPO is priced at the low end of the IPO price range, we would avoid this deal due to the lack of upside. Our base case valuation is based on 29.2x P/E of our estimated net profit of 5.8 billion won for the company in 2019.</p></div><p>In our comparable companies valuation analysis, we used three companies including Raon Secure, Web Cash, and Settlebank as comps to Aton. Settlebank is a recently listed IPO and the consensus earnings estimates of this company is limited. Plus, no analyst covers either Raon Secure or Web Cash. Thus, we are limited mostly to historical financials of these companies to compare them against Aton Inc. </p><p>We estimate Aton Inc to generate revenue of 45.4 billion won (up 62% YoY) in 2019 and 59.3 billion won (up 30.6% YoY) in 2020. We have assumed the fintech security business to represent 47.1% of total revenue in 2019 (up from 44.7% of total revenue in 2018). We believe our revenue estimates of the company are conservative, considering the fact the company's revenue increased by 77.5% YoY in 1H19.</p>

Our base case valuation of Aton Inc is 168 billion won or 38,498 won per share. This is within the IPO price range of the company which is from 30,000 won to 43,000 won. Therefore, unless the IPO is priced at the low end of the IPO price range, we would avoid this deal due to the lack of upside. Our base case valuation is based on 29.2x P/E of our estimated net profit of 5.8 billion won for the company in 2019.In our comparable companies valuation analysis, we used three companies including Raon Secure, Web Cash, and Settlebank as comps to Aton. Settlebank is a recently listed IPO and the consensus earnings estimates of this company is limited. Plus, no analyst covers either Raon Secure or Web Cash. Thus, we are limited mostly to historical financials of these companies to compare them against Aton Inc. We estimate Aton Inc to generate revenue of 45.4 billion won (up 62% YoY) in 2019 and 59.3 billion won (up 30.6% YoY) in 2020. We have assumed the fintech security business to represent 47.1% of total revenue in 2019 (up from 44.7% of total revenue in 2018). We believe our revenue estimates of the company are conservative, considering the fact the company's revenue increased by 77.5% YoY in 1H19.

ATON Inc

Aton Inc IPO Valuation Analysis