[IPO Spotlight] JITech Draws Attention with Semiconductor Specialty Gas Business

Sales of 31.5 Billion KRW in the First Half of the Year... 245% Surge Compared to the Same Period Last Year
13.7 Billion KRW Sales in the First Half Due to Russian Specialty Gas Imports
Uncertainty Due to Changes in International Affairs... Variable Factors in Corporate Valuation

[Asia Economy Reporter Hyungsoo Park] JI Tech, which is pursuing a listing on the KOSDAQ market, saw its profits surge in the first half of this year. This was influenced by increased sales related to the newly launched specialty gases business for semiconductors. Since the business involves importing specialty gases from Russia and supplying them domestically, it is expected to be a variable in determining an appropriate corporate value.

According to the Financial Supervisory Service's electronic disclosure system on the 7th, electronic materials manufacturer JI Tech is conducting an initial public offering (IPO) by offering 1,628,870 new shares and 100,000 existing shares. The proposed price range is 13,000 to 16,000 KRW per share. From the 20th to the 21st, a two-day demand forecast will be conducted targeting institutional investors, and the offering price will be finalized. The expected market capitalization after listing is between 106.5 billion and 131.1 billion KRW. Mirae Asset Securities is the lead underwriter.

JI Tech produces precursors required for the thin film process, one of the eight essential semiconductor processes. It also sells display photo mask cases, OLED materials, and rare gases for semiconductors. Last year, it recorded sales of 20.5 billion KRW, operating profit of 5.6 billion KRW, and net profit of 4.7 billion KRW. In the first half of this year, cumulative sales reached 31.5 billion KRW, operating profit 6.8 billion KRW, and net profit 5.5 billion KRW.

Mirae Asset Securities used the first half net profit as a key indicator to calculate JI Tech’s appropriate corporate value. Applying the average price-earnings ratio (PER) of 15.7 times from three comparable companies?Deoksan Tecopia, DNF, and Lake Materials?to JI Tech’s annualized net profit, the corporate value and per-share value were estimated at 171.5 billion KRW and 20,924 KRW, respectively. The annualized net profit was estimated at 10.9 billion KRW, twice the first half net profit. A discount rate of 23.53% to 37.87% was applied to the per-share value, resulting in the proposed offering price range of 13,000 to 16,000 KRW.

With the emergence of sales from the specialty gases business segment in the first half, sales and profits surged. JI Tech signed a priority exclusive supply contract with Russian specialty gas company B. It obtained exclusive rights to supply and distribute specialty gases imported from B domestically. Specialty gas sales in the first half amounted to 13.7 billion KRW, accounting for 43.9% of total sales in the period. Monthly specialty gas sales were 5.6 billion KRW in May, 8.1 billion KRW in June, and 12.4 billion KRW in August. There were no specialty gas sales until last year.

Through its securities registration statement, JI Tech explained that sales of specialty gas products would contribute to expanding its scale. However, it assessed that unilateral contract cancellation requests from the Russian company, the emergence of new specialty gas supply chains, or price reductions of specialty gas products could negatively impact the specialty gas segment’s performance. It anticipated continued price instability due to increased specialty gas usage and decreased production.

As Russia continues its war with Ukraine, prices of specialty gases essential for semiconductor production have surged. The semiconductor industry is promoting domestic production of specialty gases. There is uncertainty in the specialty gas business segment due to international political changes surrounding Russia and domestic localization efforts. The prolonged war could further increase specialty gas prices, and strengthened sanctions by the US and EU against Russia could make trade difficult.

JI Tech plans to use 9.5 billion KRW of the funds raised through the listing to build a specialty gas manufacturing plant. To resolve unstable supply conditions, it is pursuing domestic production of specialty gases. Investments in refining and charging facilities will be made by the third quarter of next year.

The extent to which institutional investors participating in the demand forecast recognize the growth potential and sustainability of the specialty gas business segment is expected to influence the final offering price.

CEO Seokheon Ham said, "In addition to the precursor business, which is our core and main business, JI Tech’s confidence comes from having diverse growth potential in the OLED organic materials and specialty gas business segments."

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