The IPO Inaugural Year... Sk Square Faces Mixed Fortunes

The First Year of Subsidiary IPOs This Year
One Store Expected to Continue Deficits
Will Overvaluation Controversy Flare Up Again?
Shielders Eyeing Possible Listing Around June

[Asia Economy Reporter Cha Min-young] SK Square's ICT subsidiaries, marking their first year of initial public offerings (IPO), are experiencing mixed fortunes as they received varied performance results last year. The first to go public, One Store, is expected to have a market capitalization of up to 2 trillion KRW, but its continued operating losses are likely to reignite debates over 'overvaluation.'

First Performance Report After Spin-off ‘Uncertain’

According to industry sources on the 14th, SK Square plans to announce its Q4 2021 earnings by the end of this month. This year marks the first time since its spin-off from SK Telecom in November last year that two subsidiaries are preparing for IPOs, drawing attention to their financial outcomes.

One Store, an application (app) market operator, recorded an operating profit in the first half of last year but is estimated to have posted a net loss for the full year. Having filed for preliminary listing review in November last year, One Store is expected to go public around March or April. Based on 2020 figures, One Store generated annual sales of approximately 150 billion KRW, with an anticipated market capitalization between 1 trillion and 2 trillion KRW, sparking controversy over potential overvaluation. A One Store representative explained, "The expected losses will not affect the listing," but if the annual loss becomes a confirmed fact, the timing of the IPO within this year could become uncertain.

The second to go public, SK Shielders, a security platform company, is estimated to have achieved stable results. It filed for preliminary listing review in January this year and is expected to succeed in going public as early as June. The company recorded cumulative sales of 1.1172 trillion KRW and a net profit of 10.9 billion KRW from Q1 to Q3 last year, and its full-year performance is also presumed to have been profitable, supported by increased demand for security services.

Mixed Mid-to-Long-Term Outlook

Other companies included in the mid-to-long-term IPO strategy are also experiencing mixed outcomes. Content Wave, the operator of the online video service (OTT) ‘Wavve,’ continues to post losses but shows a trend of increasing sales. Recently, despite having assets under 2 trillion KRW, it proactively established an audit committee to strengthen compliance (internal control). It is also setting up a cyber audit office, which is not mandatory. Typically, companies strengthen accounting audit standards as part of IPO preparations.

11st, which planned to go public before 2023, has hit a red light. Expected to be the first among subsidiaries to pursue an IPO, it has been unable to escape losses amid intensified competition in the domestic e-commerce sector, pushing its listing plans to a lower priority. Last year, it formed a new IPO promotion team and entered into a strategic partnership with the U.S. e-commerce giant Amazon, but it is still expected to post losses for the second consecutive year. During the 2018 financial investor (FI) attraction process involving the National Pension Service and others, it received conditional investment requiring an IPO within five years, leaving little time remaining.

T map Mobility, a mobility subsidiary preparing for a long-term IPO targeting 2025, is also estimated to remain unprofitable. In September last year, it granted stock options worth a total of 61.2 billion KRW to its employees. With conditions allowing 50% exercise starting two years later, there is speculation that the IPO timing will be after September 2023.

An industry insider said, "While having various new growth engines from content to mobility is an advantage, numerous FIs are involved in the process," adding, "Given the aggressive investments made during fundraising, it will be difficult to return external investors' funds without an IPO."

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