Xenics, Wingless Fall... Side Effects of Overheated Demand Forecasting

The stock price of Xenics, which was listed on the KOSDAQ market at the end of last month, has been declining day by day. Although it succeeded in attracting attention with a demand forecast competition rate exceeding 1000 to 1 to determine the public offering price, it has fallen nearly 30% compared to the public offering price in less than a month since its listing.

According to the financial investment industry on the 22nd, Xenics' stock price closed at 28,500 won the previous day. This is a 29% decrease compared to the public offering price. Compared to the high price recorded on the listing day, it plunged 56%.

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Xenics, which was listed on the KOSDAQ market on the 30th of last month, started trading at 59,000 won and even rose to 64,200 won. Afterwards, as sell orders poured in for profit-taking, it closed at 46,000 won on the first day. Since then, the stock price has been falling continuously. Except for the 15% increase compared to the public offering price on the first day of listing, there has not been a single day when the stock price rose by more than 1%. Individual investors have net purchased 22.5 billion won worth of Xenics shares since its listing. Based on an average purchase price of 48,450 won, the evaluation loss rate reaches 40%.

Founded in 2010, Xenics is a company that provides unmanned logistics automation systems (AMHS) necessary for smart factories and solutions required for factory automation (FA). Xenics recorded sales of 61.3 billion won and operating profit of 3.1 billion won last year, increasing by 18% and 72% respectively compared to the previous year. In the first half of this year, it achieved sales of 30.7 billion won and operating profit of 2.8 billion won. The operating profit in the first half of this year accounts for 90% of the total operating profit of last year.

AMHS is a logistics automation system used in advanced manufacturing plants such as semiconductors and secondary batteries. It builds equipment for the entire process from product receipt, transportation, storage, packaging, to shipment, moving materials accurately and quickly to improve productivity. Xenics has secured hardware technology for unmanned guided vehicles (AGV) capable of carrying up to 60 tons. It also possesses software technology such as real-time self-localization recognition technology (SLAM) that avoids obstacles during movement.

Receiving evaluations that it has both technological capabilities and operates in a high-growth upstream industry, it succeeded in attracting attention in the demand forecast market. The final demand forecast competition rate was 1052 to 1. The underwriter, Shin Young Securities, proposed a public offering price range of 28,000 to 34,000 won for Xenics.

Based on the quantity of demand forecast applications, 99.7% offered prices at or above the upper limit of the desired range, and the underwriter and Xenics finalized the public offering price at 40,000 won. This was 18% higher than the upper limit of the desired range. As a result of conducting a public offering subscription for general investors, the competition rate recorded was 896 to 1. Subscription deposits amounted to 3 trillion won.

The decline in Xenics' stock price, which had attracted hot interest even before listing, led to controversy over the overvaluation of the public offering price. To estimate Xenics' appropriate corporate value, Shin Young Securities presented three comparable companies: Roche Systems, Hyundai Movex, and Linkgenesis. Looking at the stock price trends after Xenics' listing, Roche Systems and Hyundai Movex fell by 3.4% and 4.8%, respectively. Linkgenesis, which fell the most, recorded a decline rate of 10.6%.

A financial investment industry official explained, "Institutional investors participating in the demand forecast try to secure as many public offering shares as possible and only consider selling them on the first day of listing," adding, "Efforts are needed to attract institutional investors who can invest from a long-term perspective."

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