[IPO Spotlight] Geumyang Green Power, Can It Capture Investor Sentiment with a Low IPO Price Range?

30 Years of Electrical Construction Expertise, Expanding into Renewable Energy
Leading Domestic Experience in ESS Project Installation

[Asia Economy Reporter Jang Hyowon] Kumyang Green Power, which is emerging as a renewable energy solutions company, is knocking on the door of the KOSDAQ market. The market highly values Kumyang Green Power’s reasonable public offering price band and the growth potential of its renewable energy business.

According to the financial investment industry on the 24th, Kumyang Green Power is conducting a demand forecast for institutional investors until today. The total number of shares to be offered is 3,007,320, with a desired public offering price per share of 6,700 to 8,000 KRW. The expected amount to be raised is approximately 20.1 to 24 billion KRW.

Kumyang Green Power is a company specializing in electrical construction for chemical and power plants and renewable energy development projects. Since its establishment in 1993, it has built specialized competitiveness in the electrical construction field and is expanding its renewable energy business portfolio based on this foundation.

In particular, Kumyang Green Power has the most construction experience in the domestic energy storage system (ESS) sector. Until 2021, ESS project orders were suspended due to a series of fire accidents, but in September last year, the approximately 800 billion KRW ‘ESS Construction Project for Grid Stabilization’ led by Korea Electric Power Corporation passed the preliminary feasibility study, and ESS project orders are expected to resume.

As of the end of the third quarter last year, consolidated sales were 164.8 billion KRW, and operating profit was 8.5 billion KRW, representing increases of 29.3% and 91.5%, respectively, compared to the same period the previous year. Last year’s annual performance is expected to record sales of 195 to 200 billion KRW and operating profit of 12.5 to 13 billion KRW.

The sales composition by segment is 74.1% from plant electrical construction, 7.5% from renewable energy electrical construction, 15.4% from services, and 2.9% from others. Currently, plant electrical construction accounts for the largest share of sales, but the proportion of renewable energy EPC (engineering, procurement, and construction) is rapidly increasing. The sales share of the renewable energy sector is expected to grow to around 15%.

The order backlog is also increasing. As of the end of last year, Kumyang Green Power’s order backlog was 224 billion KRW, an increase of about 100 billion KRW compared to the previous year. Construction sales from orders are recognized according to progress, with the usual execution period being 1 to 3 years. With the increase in order backlog, double-digit sales growth is expected this year as well.

What the market is particularly focusing on is the reasonable public offering price. The price-to-earnings ratio (PER) multiples of the desired price band proposed by Kumyang Green Power in this offering are 6.4 to 7.7 times. This is a lower multiple compared to the average, even though domestic renewable energy-related companies’ PERs are at the 10 to 20 times level.

Yu Kyungha, a researcher at DB Financial Investment, analyzed, “While domestic renewable energy-related companies have PERs above 20 times and renewable energy equipment manufacturers also exceed 10 times, Kumyang Green Power’s desired public offering price is evaluated at a relatively low level.” He added, “Kumyang Green Power still has a high sales dependency on chemical and power plants rather than renewable energy, so there is a possibility it will be classified as a specialized construction company rather than a renewable energy company that receives a valuation premium. However, as renewable energy development projects become more visible, the valuation is expected to be readjusted.”

Meanwhile, Kumyang Green Power plans to finalize the public offering price after completing the demand forecast today, proceed with subscription on March 2?3, and list on the KOSDAQ within March. The lead underwriter is Samsung Securities.

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