Newcomers Crossing the September Listing Threshold Appear... Kurly, Golfzon, and K Bank Struggle to Inject IPO Momentum

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[Asia Economy Reporter Lee Seon-ae] Although companies are emerging that pass the preliminary listing review hurdle of the Korea Exchange (KRX), the first gateway of an initial public offering (IPO), it is expected to be difficult to complete the final listing. The IPO market, which enjoyed a boom over the past two to three years, is forecasted to shrink this year.

According to the Korea Exchange on the 2nd, the KOSDAQ Market Division approved the preliminary listing reviews of Golfzon Commerce and JI Tech through the deliberation and resolution of the KOSDAQ Market Committee the day before. The expected public offering amount for Golfzon Commerce is 70.7 billion to 78.6 billion KRW, and for JI Tech, it is 25.9 billion to 29.7 billion KRW.

Golfzon Commerce, the leading golf shopping specialist company in Korea, decided to proceed with listing this year, judging that the current time is the best opportunity to receive a favorable corporate valuation considering the rapidly increasing golf population and base. Golfzon County, a group company of Golfzon Commerce, also received listing approval last month and is aiming to enter the stock market within the year. If the remaining schedule proceeds smoothly, the largest shareholder, Golfzon Newdin Holdings, will set a rare record by listing two subsidiaries in one year.

As of the day before, a total of 88 companies (including SPACs) have undergone IPO review, with 35 companies approved. The companies attracting the most market attention in terms of future market capitalization and business models include Kurly, Golfzon County, K Bank, Bionote, and Golfzon Commerce. However, the general view in the securities industry is that these major players are unlikely to complete the final listing and revitalize the IPO market.

Lee Kyung-eun, a researcher at KB Securities, said, "Considering the numerous listing withdrawals and delays this year, if a company does not receive a favorable evaluation during demand forecasting or if urgent fundraising through listing is not necessary, the listing schedule may be postponed." Previously, IPO giants such as SK Shieldus, Hyundai Engineering, One Store, and Hyundai Oilbank withdrew their listings due to concerns about not receiving proper corporate valuations.

Lee Woong-chan, a researcher at Hi Investment & Securities, emphasized, "In the IPO market downturn, Socar lowered its expectations and proceeded with listing at a valuation lower than the previous fundraising, while SSG.com, CJ Olive Young, and Yanolja postponed their public offerings to next year, continuing the IPO market slump."

In particular, Socar's failure is a painful example forecasting a sluggish IPO market in the second half. Socar, once valued as a unicorn (corporate value of 1 trillion KRW), failed to attract public interest and entered the market after reducing its size by about 40%, but failed to reverse the mood afterward. Socar's market capitalization on the first day of listing was only about 860 billion KRW, losing both demand forecasting and general subscription popularity. This was approximately 50 billion KRW less than the confirmed public offering market capitalization of 916.3 billion KRW (based on the fixed public offering price of 28,000 KRW). Han Seung-han, a researcher at SK Securities, pointed out, "The market controversy over high valuation compared to global mobility platforms and differentiation from domestic rental car companies was not resolved."

This year, the IPO market contraction is inevitable. Up to the first half of the year, a total of 50 companies proceeded with listings, and excluding 16 SPACs, 34 companies entered the stock market. Excluding KONEX companies, 48 companies were listed, down from 59 in the same period last year. As of the end of last month, excluding SPACs, a total of 44 companies (3 KOSPI, 37 KOSDAQ, 4 KONEX) were listed. Compared to last year’s same period, when 51 companies including SK Bioscience, SK IE Technology, Kakao Bank, and Krafton entered the market, this represents a decrease of about 14%. Since investment sentiment is not expected to recover in the second half, a decrease in the number of listed companies on an annual basis is inevitable.

However, if the IPO market bottoming continues due to the slump, it could become an investment opportunity. The researcher explained, "If situations like Socar’s, where companies attempt to list at valuations much lower than the over-the-counter prices, continue, it may be worth taking renewed interest in the IPO market from an investment perspective." Currently, the over-the-counter market capitalizations of leading unicorns such as Kurly and K Bank have already been halved or even reduced to one-third.

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