Opening After One Month... Sencore Tech, Will It Ignite the IPO Market?

[Asia Economy Reporter Koh Hyung-kwang] Amid the severe contraction of the corporate public offering market due to the impact of the novel coronavirus infection (COVID-19), the construction company Sencore Tech has launched a demand forecast for its initial public offering (IPO). The results of Sencore Tech's demand forecast are attracting significant attention from both companies waiting for IPOs and the market, as they could serve as a barometer for the frozen public offering market.

According to the financial investment industry on the 14th, Sencore Tech is conducting a demand forecast targeting institutional investors from the previous day through today. This is the first demand forecast held in about a month since Cape ES SPAC No. 4 on the 9th of last month.

Sencore Tech is a comprehensive construction company that handles architectural design, manufacturing, and construction. It is a leader in the construction technology called 'Design for Manufacture and Assembly (DfMA),' which designs and manufactures buildings in factories and then transports and assembles them like Lego blocks at construction sites. As of last year, its sales were 220 billion KRW, and operating profit was 20.1 billion KRW, representing increases of 133.4% and 53.6%, respectively, compared to the same period the previous year.

Sencore Tech has proposed a desired public offering price band of 12,400 to 16,500 KRW. Based on the annualized performance calculated simply from the cumulative results of the third quarter of last year, the price-to-earnings ratio (PER) is between 4 and 5.4 times. Sencore Tech plans to accept subscriptions from general investors on the 20th and 21st, based on the demand forecast results.

Recently, the public offering market has been almost at a standstill due to the impact of COVID-19. The total size of domestic IPO public offerings in the first quarter of this year was 271.8 billion KRW, a drop of more than 65% compared to last year (779.2 billion KRW). This is because companies judged that it would be difficult to receive appropriate corporate valuations amid the COVID-19 crisis, leading many to postpone their public offering schedules or withdraw their listings altogether. In the first quarter alone, 6 to 7 companies postponed or withdrew their listings. Sencore Tech also withdrew its securities registration statement and postponed its listing schedule on the 5th of last month.

The demand forecast being conducted after a long hiatus has also drawn great interest from upcoming public offering companies. If Sencore Tech's demand forecast is successful, it could lead to a rush of IPOs from companies on standby. Currently, about ten companies, including SK Biopharm, SCM Life Sciences, Aptamer Science, and LSEV Korea, are coordinating their demand forecast schedules.

A securities industry official said, "Recently, stock price volatility has decreased, and many of the previously plummeted public offering stocks have recovered significantly, improving conditions compared to before, leading companies to reconsider their listing timings. Although many still prefer to wait and see, if the public offering market normalizes, the number of companies attempting IPOs will gradually increase."

This content was produced with the assistance of AI translation services.