[Post-IPO] Senko, Steady but Disappointing Growth

[Asia Economy Reporter Yoo Hyun-seok] Senko, leveraging its domestically developed gas sensor mass production technology, has been supplying products to various industrial sectors and improving its performance annually. However, its growth has been slow, failing to meet the projections made at the time of its listing.

Senko was established in 2004. It developed the first electrochemical gas sensor mass production technology in Korea, localizing gas sensor technology that had been entirely dependent on imports.

The company possesses gas sensor technology capable of quantitatively detecting concentrations of about 80 gases, including carbon monoxide, hydrogen sulfide, and hydrogen.

Based on this, it supplies products in various fields such as industrial safety, environmental measurement, odor monitoring, and healthcare respiratory measuring devices. It has also expanded into markets including petroleum and gas production facilities, hydrogen vehicles and hydrogen production facilities, semiconductor production facilities, and wearable devices.

In April last year, Senko successfully attracted an investment of 25 billion KRW from the POSCO Group. Through this, it has expanded its business areas by acquiring Kentec, an environmental measuring instrument manufacturer, and UNE, a safety management solution specialist.

Senko entered the KOSDAQ market in October 2020 with a public offering price range of 10,000 to 13,000 KRW. It recorded an institutional investor competition rate of 848.37, and the final public offering price was set at 13,000 KRW, the upper end of the desired price range. Through this, it raised 21 billion KRW, securing 17 billion KRW after deducting 4 billion KRW in issuance costs.

The company announced that it planned to use 14 billion KRW of this for facility funds such as new factory construction and equipment establishment, 400 million KRW for new personnel expansion, 900 million KRW for debt repayment, and 1.6 billion KRW for other purposes.

However, the actual amount used from the funds was 8.8 billion KRW. Senko utilized 6.8 billion KRW for facility funds. The company explained in its quarterly report that the difference occurred because the industrial complex approval for the planned land purchase site was rejected, leading to the purchase of an alternative nearby site.

At the time of listing, Senko anticipated continuous growth due to government policies. This was because the government implemented the "Safety Management and Business Act for Liquefied Petroleum Gas," which legally mandates the installation of CO (carbon monoxide) gas alarms on all boilers starting from production in August last year. Additionally, the company planned to grow through full-scale entry into the major U.S. market and expansion into new markets.

Performance steadily improved. Sales, which were 14.7 billion KRW in 2018, increased to 19.8 billion KRW and 20.1 billion KRW in 2019 and 2020, respectively. Operating profit was 27.7 million KRW in 2018, 2.3 billion KRW in 2019, and 1.2 billion KRW in 2020. As of the third quarter of last year, cumulative sales reached 15.1 billion KRW with an operating profit of 1.7 billion KRW. Sales increased by 39.99% compared to the same period the previous year, and operating profit turned positive.

However, these figures fall short of the projections made at the time of listing. As a special listing company, Senko estimated future operating performance in its securities registration statement. The expected sales for 2020 were 24.8 billion KRW, and operating profit was 4.2 billion KRW. The deviation rates were 18.70% for sales and 71.95% for operating profit compared to actual results.

The company explained in its quarterly report that sales, operating profit, and net income fell short of all forecasted figures due to overseas market contraction caused by COVID-19 and increased expenses related to listing costs.

It is expected that the company will also fail to meet targets last year. The projected sales and operating profit for 2021 were 42.1 billion KRW and 10.5 billion KRW, respectively. However, cumulative sales up to the third quarter of last year were less than half of the forecast.

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