Last Month, IPO Returns Exceeded 70% Amid Box Range Market Conditions

[Image source=Yonhap News]

[Asia Economy Reporter Ji Yeon-jin] Last month, while the KOSPI index continued to trade below 3000, the returns on public offering stocks exceeded 70%.

According to the Korea Exchange on the 5th, as of the closing price on the 3rd of this month, the average stock price increase rate compared to the public offering price for 12 companies newly listed on the KOSPI and KOSDAQ in November (excluding REITs and SPACs) was 75.65%.

This means that investors who were allocated shares through public offering subscriptions and held them until that day could have earned an average profit of 75%.

Considering that from the 1st of last month to the 3rd of this month, the KOSPI slightly fell from 2978.94 to 2968.33, and the KOSDAQ from 998.57 to 998.47, this is a significant return.

Looking at individual companies, except for Geninus (-36.75%), the stock prices of 11 out of the 12 companies exceeded their public offering prices. In particular, GeoElement (240%), DearU (165%), Enchem (158.57%), and KakaoPay (127.22%) posted returns exceeding 100%.

Lee Seung-woo, a researcher at DB Investment & Securities, analyzed, "Due to concerns about global interest rate hikes and inflation instability, investment sentiment was dampened, causing the KOSPI to remain in a box range. However, the IPO market showed relatively favorable results as companies related to secondary batteries and platforms were listed."

However, the enthusiasm for public offerings is not expected to continue from this month. Five companies?ToolGen, KTB Network, RemonRain, AutoN, and Adbiotech?are scheduled for subscription this month, which is about half compared to last month (12 companies) and December of last year (12 companies).

Recently, companies like ToolGen and KTB Network, which underwent demand forecasting, accepted public offering prices below the lower end of their expected ranges, indicating deteriorated investment sentiment. ToolGen's institutional demand forecast competition rate on the 25th-26th of last month was 29.54 to 1, the lowest among newly listed companies this year. Only one out of 324 institutions agreed to a lock-up commitment, and the public offering price was set at 70,000 won, 30% lower than the lower end of the expected range (100,000 to 120,000 won).

KTB Network was directly hit by the new COVID-19 variant Omicron. During the institutional demand forecast on the 29th-30th of last month, when Omicron concerns were spreading, the competition rate was 50.19 to 1. Accordingly, the public offering price was set at 5,800 won, the lowest end of the expected range (5,800 to 7,200 won).

The market is focusing on LG Energy Solution, which is scheduled to be listed on the KOSPI in January next year. LG Energy Solution passed the preliminary review for KOSPI listing on the 30th of last month. The company plans to submit a securities registration statement in early next month and list within the same month. LG Energy Solution's corporate value is expected to exceed 70 trillion won, instantly ranking it third in KOSPI market capitalization. The researcher said, "As of the end of November, among the 12 companies approved for preliminary review, two withdrew their listings, and three were transferred from KONEX, so it will be difficult to attract demand in December. It is expected that funds will concentrate on LG Energy Solution, which is considered the biggest IPO at the beginning of the year."

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