[Post-IPO] Korea Center, Untact Drives Strong Performance Growth 'Boom Boom'

[Asia Economy Reporter Yoo Hyun-seok] Korea Center is reaping significant benefits from COVID-19. As overseas travel has been restricted, the growth of overseas direct purchase sites continues. Recently, the company has also expanded its size by successfully acquiring Danawa.

Korea Center was established in 2000. It is a platform company that provides solutions necessary for e-commerce business. It owns 'Malltail,' the No.1 overseas direct purchase platform, and 'MakeShop,' the No.1 paid shopping mall solution. From global procurement and supply to shopping mall construction and operation, integrated management of multiple markets, advertising and marketing, to global logistics and sales support based on big data, it offers optimal services to meet the demands of e-commerce operators. Its subsidiary, Summers Platform, owns price comparison sites such as 'Enuri.'

At the time of its KOSDAQ listing, the expected public offering price was between 24,000 and 27,200 KRW. Through this, it planned to raise 61.1 billion to 69.2 billion KRW. However, the public offering price fell short of expectations. The final public offering price was 18,000 KRW. The sluggish performance of similar platform companies like Cafe24 at the time influenced this outcome.

The company planned to use the public offering funds for expanding logistics coverage (19.4 billion KRW), mergers and acquisitions (18.6 billion KRW), debt repayment (7.8 billion KRW), and research & development (R&D) and operating funds (8 billion KRW), totaling 53.7 billion KRW. However, as the public offering price dropped, the total amount raised decreased to 45.8 billion KRW, leading to reductions in the allocated amounts for each sector: logistics coverage expansion (14.5 billion KRW), mergers and acquisitions (13.9 billion KRW), debt repayment (5.8 billion KRW), and R&D and operating funds (6 billion KRW).

There was also a difference between the planned and actual use of funds. Instead of using funds for logistics coverage expansion, 25.2 billion KRW was invested in a third-party allotment capital increase for PlayAuto. Additionally, 5.6 billion KRW was used for debt repayment and 9.4 billion KRW for operating funds. PlayAuto used the funds secured through Korea Center to acquire LinkPrice, an online marketing service provider. The acquisition amount was 39.25 billion KRW.

A company representative stated, "Instead of directly investing in overseas logistics centers, we changed to a model of operating through partnerships with local logistics companies," adding, "The public offering funds originally allocated for logistics center investment were utilized by our subsidiary PlayAuto as acquisition funds for LinkPrice, which was being pursued to expand services and strengthen business for online sellers."

Since listing, the company's performance has grown annually. On a consolidated basis, sales increased from 189.7 billion KRW in 2019 to 197.8 billion KRW last year, and operating profit rose from 5.6 billion KRW to 7.8 billion KRW. Korea Center's business divisions are divided into domestic, global, big data e-commerce, and others. Among these, domestic and global e-commerce sales growth was high. In particular, domestic e-commerce stood out, with sales increasing from 55.5 billion KRW in 2019 to 86.5 billion KRW last year, while global sales rose from 145.3 billion KRW to 158 billion KRW.

This year also saw growth. Cumulative sales up to the third quarter reached 248.4 billion KRW, with operating profit of 12.9 billion KRW. Compared to the same period last year, sales increased by 15.98% and operating profit by 0.92%. However, looking at the third quarter alone, sales were 77.7 billion KRW, up 7.88% year-on-year, but operating profit decreased by 9.38% to 3 billion KRW.

A company representative said, "Sales increased due to the expansion of overseas direct purchase base caused by the COVID-19 pandemic, the growth of a more affordable and thrifty shopping population, and increased demand for big data, supported by the industry's first shopping mall product search engine 'Dachatda' and the 'Web Solution' that allows easy and fast product registration, inventory management, and product modification," but added, "Operating profit slightly decreased due to increases in labor costs, transportation expenses, and business advancement costs." The representative also added, "The cumulative sales and operating profit up to the third quarter are the largest ever."

Korea Center is preparing for another step of growth. It has signed a stock purchase agreement (SPA) to acquire management rights of Danawa, an e-commerce company focusing on price comparison platform business and the assembled PC open market ShopDanawa. The total acquisition price is 397.9 billion KRW at 59,331 KRW per share. A company representative emphasized, "Korea Center is the only domestic company supplying e-commerce-related solutions under a vertical value chain to the market," and added, "We know the e-commerce market better than anyone else, and synergies with our affiliates are expected."

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