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

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Equity Capital Markets

<p>The IPO price range for the <a href="https://www.smartkarma.com/entities/ls-ev-korea-ltd" target="_blank" data-smartkarma-citation="entities:28866:1" rel="noopener">LS EV Korea Ltd (1566799D KS)</a> is from 5,500 won to 6,100 won. The book-building for the institutional investors starts on 11 March. Given the terrible market conditions, unless the IPO price is reduced significantly, it may be difficult for the company to pull off this IPO at the end of this IPO. There is a high probability of this IPO getting postponed. </p>
<p>We forecast the company to generate sales of 182.3 billion won (down 21% YoY) and an operating profit of 11.9 billion won (down 52% YoY) in 2020. The coronavirus is likely to have a major negative impact on the company's operations in both China and South Korea in terms of sales and profits. </p>
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<p><strong>Applying the P/E multiple of 12.9x against our estimated net profit of 15.7 billion won, this results in an implied market cap of 202 billion won or 4,850 won per share. This is 12% lower than the low end of the IPO price range of 5,500 won. Because our estimated intrinsic value of the company is lower than the IPO price range, we have a negative view of the stock and would pass up on the IPO deal. </strong></p>
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The IPO price range for the LS EV Korea Ltd (1566799D KS) is from 5,500 won to 6,100 won. The book-building for the institutional investors starts on 11 March. Given the terrible market conditions, unless the IPO price is reduced significantly, it may be difficult for the company to pull off this IPO at the end of this IPO. There is a high probability of this IPO getting postponed. 
We forecast the company to generate sales of 182.3 billion won (down 21% YoY) and an operating profit of 11.9 billion won (down 52% YoY) in 2020. The coronavirus is likely to have a major negative impact on the company's operations in both China and South Korea in terms of sales and profits. 

Applying the P/E multiple of 12.9x against our estimated net profit of 15.7 billion won, this results in an implied market cap of 202 billion won or 4,850 won per share. This is 12% lower than the low end of the IPO price range of 5,500 won. Because our estimated intrinsic value of the company is lower than the IPO price range, we have a negative view of the stock and would pass up on the IPO deal. 


LS EV Korea Ltd

LS EV Korea IPO Valuation Analysis