'Socar' with 'Poor Performance' to List on KOSPI on the 22nd... Divergent Stock Price Forecasts

Park Jae-wook, CEO of Socar, is introducing the company at a press conference held on the 3rd of this month in Yeouido, Seoul. Photo by Socar

[Asia Economy Reporter Lee Jung-yoon] Socar, which recorded low popularity in its initial public offering (IPO) demand forecasting and general subscription, is set to be listed on the Korea Exchange.

According to the Korea Exchange on the 21st, Socar will begin trading on the Korea Exchange market on the 22nd of this month. Socar's offering price is 28,000 KRW. Previously, due to controversy over the overvaluation of the offering price, the institutional demand forecast competition rate was only 56.07 to 1. Therefore, the offering price was set at 28,000 KRW, below the initially hoped range (34,000 to 45,000 KRW), and the offering volume was reduced by 20% from the original 4.55 million shares to 3.64 million shares. Based on the offering price, the market capitalization is 966.6 billion KRW, falling short of 1 trillion KRW.

However, the outlook for Socar's stock price after listing is also considered difficult to be optimistic. First, during the demand forecasting process, almost no institutions committed to lock-up, which could lead to a large volume of shares being released after listing.

Institutional investors were allocated 2,443,700 shares (67.1%) out of 3.64 million shares, of which 2,256,700 shares, or 92.35%, were without lock-up commitments. The remaining 187,000 shares (7.65%) with lock-up commitments have a lock-up period of 15 days, and no institutions committed to a lock-up period of one month or longer. Excluding employee stock ownership (286,300 shares, 7.9%) from the new offering volume, more than 3 million shares allocated to institutional and general investors will be fully released immediately after listing. The employee stock subscription rate was only 39%, and the general subscription competition rate was just 14.4 to 1.

Additionally, Socar recorded an operating profit of 1.4 billion KRW in the second quarter of this year, escaping losses, but posted an operating loss of 21 billion KRW for the entire last year.

However, there is also an assessment that Socar has sufficient potential for stock price growth if cost improvements are confirmed. At an IPO press conference earlier this month, Socar stated that it is possible to turn a profit this year and that significant improvements in operating profit are expected going forward.

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