[Post-IPO] ① Enbionia, Disappointment Follows High Expectations

Envionia, Listed on KOSDAQ Last October, Achieves Less Than 50% of Operating Profit Target
Result of Decreased Orders in Q4 and Delays in Client Operations
Growth Expected Amid Rising Health Interest... Confident in Medical Material Technology Expertise

Amid the aftermath of the novel coronavirus infection (COVID-19), funds are flowing into the frozen initial public offering (IPO) market. This year’s largest IPO, SK Biopharm, attracted subscription deposits amounting to 31 trillion won. This is the largest scale ever recorded. Internet-only bank KakaoBank is also preparing for its IPO, targeting a listing in the second half of this year. As the domestic stock market showed significant volatility due to COVID-19, the number of individual investors newly starting stock investments has increased. With growing interest in IPO investments, it is necessary to make judgments about the appropriate offering price when investing in public shares. Asia Economy reviews the investment prospectuses presented by newly listed companies on the domestic stock market and examines the appropriateness of their offering prices.

[Asia Economy Reporter Park Hyungsoo] Envionia, a developer of advanced composite materials, recorded a subscription competition rate of 910 to 1 when it was listed on the KOSDAQ market in October last year. More than 800 billion won in market funds poured in as subscription deposits. It also recorded a high competition rate in demand forecasting targeting institutional investors. However, considering that the stock market was sluggish due to the US-China trade dispute at the time, the IPO price was set at the lower end of the desired price range, 8,200 won, by the lead underwriters Mirae Asset Daewoo and Envionia.

One of the bases for calculating the offering price was the earnings forecast. Envionia expected to achieve sales of 12.1 billion won and operating profit of 2.8 billion won in its first year of listing, 2019. This estimate included sales of 9.3 billion won from its main product, the cationic filter for water purifiers, 1.5 billion won from lightweight automotive composite materials, and 500 million won from air purifier filters. Since the half-year performance for 2019 was confirmed and the annual performance forecast was presented, investor trust was high.

However, Envionia recorded sales of 9.7 billion won and operating profit of 1.3 billion won last year. The achievement rate compared to the forecast was 80% for sales and 46% for operating profit.

Envionia explained that the decrease in orders in the fourth quarter of 2019 was due to inventory adjustments by major clients, and that new sales were deferred to 2020 due to delays in new products and client operations.

Envionia’s earnings forecast presented in the investment prospectus for this year is sales of 23.9 billion won and operating profit of 7.1 billion won. In the first quarter of this year, it recorded sales of 2.2 billion won and operating profit of 100 million won. Due to the impact of COVID-19, the global consumer economy contracted, causing sales to decrease by about 11% compared to the first quarter of last year. This means warning signs have been raised for achieving this year’s forecast following last year.

As of the closing price on the 19th, Envionia’s stock price is 6,240 won, below the offering price. The highest price after listing was 14,650 won, recorded on October 25, the day after listing last year. On March 20, when the domestic stock market plunged sharply due to COVID-19, the stock price fell to as low as 2,950 won.

Founded in January 2001, Envionia is a manufacturer of high-performance filter paper. It has secured technological competitiveness by continuously researching functional environmental materials. It developed wet nonwoven fabric core technology and applied it to water purifier filter materials. It secured core technology that maximizes filter efficiency by using an electrostatic adsorption method rather than the conventional mechanical filtration method.

The main product is the “cationic high-performance water purifier nanofilter (cationic filter).” It is an adsorption filter that adds positive charges to the surface of fiber nonwoven fabric. It secures permeability with pore sizes at the microfiltration (MF) level while improving the removal efficiency of negatively charged water pollutants such as viruses and bacteria. It replaces existing reverse osmosis (RO) and ultrafiltration (UF) membranes. Envionia’s virus and bacteria removal performance is superior to competitors, and its filter lifespan is longer.

Last month, Envionia filed a patent for medical materials. A patent related to a method of manufacturing moisture-absorbing pads that can be used in various in vitro diagnostic kits. Envionia expressed confidence that, based on the technology accumulated while developing medical composite materials, its products can compete with those of global material companies in terms of performance and quality.

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