[IPO Spotlight] Bionote, Demand Forecast Success Key to Animal Diagnostics Blueprint

Demand Forecast for Institutional Investors on 8-9th
Offering Discount Rate Similar to SD Biosensor
Focus on Achieving 2 Trillion KRW Valuation
Emphasizing Growth Potential in Animal Diagnostics

[Asia Economy Reporter Hyungsoo Park] Bionote is focusing on highlighting the growth potential of its animal diagnostic business segment ahead of finalizing its public offering price. While the sales growth rate of raw materials for COVID-19 diagnostic kits is slowing down, the animal diagnostic business segment is rapidly expanding.

According to the Financial Supervisory Service's electronic disclosure system on the 2nd, Bionote will conduct a demand forecast for institutional investors over two days from the 8th to the 9th. The expected price range for the public offering is set between 18,000 and 22,000 KRW. The anticipated market capitalization is between 1.8712 trillion and 2.287 trillion KRW, making it the last major IPO of this year.

Bionote is actively promoting its unique antigen and antibody core technologies, the development of various new product sales channels through overseas networks, and its mid- to long-term growth plans based on market dominance during the remaining period before the demand forecast.

In Yeouido’s securities market, there is scrutiny over whether Bionote will continue its growth through the animal diagnostic business amid declining demand for COVID-19 diagnostic kits. This is expected to be an important indicator in assessing Bionote’s appropriate corporate value.

Bionote recorded cumulative sales of 456.9 billion KRW and operating profit of 307.5 billion KRW through the third quarter of this year, representing decreases of 14% and 28%, respectively, compared to the same period last year. Bionote supplies COVID-19 diagnostic kits in semi-finished form upon development and production requests from its affiliate SD Biosensor. Related sales and operating profit decreased by 83.7 billion KRW and 117.9 billion KRW, respectively, compared to the previous year, affected by reduced demand for diagnostic kits.

The animal diagnostic business unit achieved cumulative sales of 51.2 billion KRW and operating profit of 19.7 billion KRW through the third quarter, marking increases of 19% and 1%, respectively, compared to the same period last year. To expand the business, the company increased hiring and raised expenses for new product development and advertising, causing the profit growth rate to lag behind the sales growth rate. Although the animal diagnostic business accounts for just over 10% of total sales, Bionote expects the sales proportion of the animal diagnostic kit segment to increase.

Up to the third quarter of this year, Bionote sold 15,500 units of fluorescent equipment (Vcheck F), which explains the increase in sales of diagnostic reagents required for the fluorescent equipment. CEO Byungki Cho of Bionote stated, "We will lead growth by securing a diverse range of animal diagnostic-related product lines through technological innovation," adding, "We will continuously expand the business through aggressive product development and mergers and acquisitions (M&A)."

Earlier, at the end of last month, Bionote completed registration approval from Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) for a diagnostic kit that can detect kidney disease in companion animals. It is expected to supply related products to more than 3,000 animal hospitals in Japan starting next year.

Bionote plans to use part of the funds raised through the IPO to acquire animal diagnostic sales and production companies in the North American region. The company is considering expanding its sales capabilities in the North American market, the largest market for animal diagnostics, through localization of Bionote products. It expects that producing locally when participating in bids will help secure a competitive advantage.

Judgments on the expected price range for the public offering vary, considering Bionote’s growth strategy and feasibility. Products supplied to SD Biosensor accounted for 79% of total sales. If the decline in sales of COVID-19 diagnostic products outpaces the growth rate of animal diagnostic products, an overall sales decrease is inevitable.

SD Biosensor, which went public in July last year, currently trades below its offering price. Despite criticism of overvaluation due to reliance on a single product for over 90% of sales at the time of listing, SD Biosensor set its public offering price at the upper end of the expected range, 52,000 KRW, buoyed by demand forecasts amid the COVID-19 Delta variant outbreak. The current stock price is 31,800 KRW, only about 60% of the offering price. NH Investment & Securities and Korea Investment & Securities, co-lead underwriters of SD Biosensor, applied discount rates of 47.8% to 39.7% when calculating corporate value.

NH Investment & Securities and Korea Investment & Securities are also managing Bionote’s listing. They proposed the expected price range for the public offering by applying discount rates of 47.5% to 35.8%.

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