Is the IPO Boom Cooling Down? Lower First-Day Gains on Listings

Mintec and DND Pharmatech Listed This Month
Average Rise of 16.6% on First Day
Slower Compared to Last Month's 99.8%

This month, Mintec and D&D Pharmatech, which directly listed on the domestic stock market, recorded lackluster performances on their first day of trading. A high increase rate compared to the initial public offering (IPO) price on the first day of listing is a factor that boosts the subscription competition rate for IPO shares. If HD Hyundai Marine Solutions, considered the biggest IPO in the market in the first half of this year, also shows a lower-than-expected increase rate on its first day, there is a forecast that the IPO market enthusiasm may somewhat cool down.

According to the financial investment industry on the 7th, the average increase rate on the first day of listing for Mintec and D&D Pharmatech was 16.6%. This is 83.2 percentage points lower than the average increase rate of 99.8% for the two companies listed last month. The average closing price return compared to the IPO price for newly listed companies in the first quarter of this year was 119.9%. It can be confirmed that the return rate in May this year was particularly sluggish.

Mintec, which was listed on the 3rd, is a battery diagnostic company. It commercialized the third-generation battery diagnostic technology, which combines electrochemical impedance spectroscopy (EIS) and artificial intelligence (AI) technology, for the first time in Korea. Its sales increased from 1.3 billion KRW in 2019, when it officially entered the market, to 17.3 billion KRW last year. It supplies diagnostic equipment and solutions to Hyundai Motor, LG Energy Solution, Sungil Hightech, and others.

From the 23rd to the 24th of last month, it conducted a public subscription for general investors, attracting more than 6 trillion KRW in deposits. The competition rate recorded was 1,529 to 1.

Although it succeeded in generating hype before listing, the stock price on the first day fell short of expectations. It was listed at the IPO price of 10,500 KRW, rose to 16,000 KRW, but closed at 12,880 KRW. On the day of listing, the KOSDAQ index fell by 0.22%.

D&D Pharmatech, which was listed a day before Mintec, also rose to 53,900 KRW on the first day but gave back most of the gains and closed at 36,500 KRW. This is a 10.6% increase compared to the IPO price of 33,000 KRW.

Founded in 2014, D&D Pharmatech is developing chronic disease treatments using GLP-1 class peptides. It holds multiple GLP-1-based pipelines, including an oral obesity treatment and an injectable treatment for metabolic dysfunction-associated steatohepatitis (MASH). GLP-1 (Glucagon-like peptide 1) is a type of hormone secreted in the small intestine upon food intake, which functions to increase insulin synthesis and secretion, suppress glucagon secretion, and delay digestive absorption processes.

D&D Pharmatech conducted demand forecasting and public subscription during a period when the stock market was shaken by the conflict news between Iran and Israel. From the 12th to the 18th of last month, over five business days, demand forecasting was conducted targeting domestic and foreign institutional investors, after which the IPO price was set at 33,000 KRW. This is 26.9% higher than the upper limit of the IPO price range, which was 26,000 KRW. More than 7 trillion KRW in deposits were attracted during the public subscription for general investors.

Despite the hype in demand forecasting and public subscription, the stock price trends of Mintec and D&D Pharmatech on their first day of listing failed to meet expectations. Amid growing concerns about IPO price bubbles, the poor return on the first day of listing could also affect subscription competition rates.

Since the second half of last year, the IPO market has shown signs of overheating. This year, the rate of confirming IPO prices above the upper limit of the price range for four consecutive months is 100%. Researcher Park Jong-sun of Eugene Investment & Securities explained, "The 100% rate of confirming prices above the upper limit for more than four consecutive months has only happened once before," adding, "From December 2020 to April 2021, the rate of confirming prices above the upper limit was maintained at 100% for five months."

A financial investment industry official analyzed, "If the sluggish increase rate on the first day of listing continues, the expectations of IPO investors may lower," and added, "The stock price trend on the first day of listing of HD Hyundai Marine Solutions, which attracted 25 trillion KRW in subscription deposits, is expected to influence the atmosphere of the IPO market."

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