Korean stock debutantes of H1 2021 are off 40% over a year, spoiling IPO pipeline

2022.05.16 11:32:49 | 2022.05.16 15:17:17

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South Korea’s one-year-old stock debutantes are performing 40 percent below their opening prices to underscore the disappointments to the IPOs of last year after foams during asset frenzy have been removed under rising interest rate environment.

According to an analysis conducted by Maeil Business Newspaper, 39 stocks who joined the Korean stock markets in the first half of last year have lost 41 percent on average against their debut prices.

CNTus Sungjin Co., a filter and mask manufacturer, recorded the biggest drop of 83 percent, followed by digital healthcare company Life Semantics Corp. 72 percent, elevator components manufacturer Haisung TPC 72 percent, artificial intelligence (AI) medical device company Vuno Inc. 70 percent, and cosmetic material company Sunjin Beauty Science Co. 69 percent.

IPO candidates of last year debuted in much fanfare on expectation for high growth, but the latest high interest rate trend has taken a bigger toll on these growth stocks that also have disappointed the market with poor earnings. Especially, the growth outlook on the mask manufacturers and platform companies has sharply turned negative from positive with eased Covid-19 restrictions.

With the exception of Sunjin Beauty Science, the four other companies that recorded the biggest drop in share prices delivered either a fall in operating profit or large loss for a year.

Only three companies out of the 39 companies listed early last year traded above their debut prices. The stock price of Amosense Co., a smartphone and auto components manufacturer has gained 36 percent, OLED material company P&H Tech Co. 24 percent, and content production company Giantstep 11 percent thanks to an improvement in their earnings over a year period. Giantstep posted a bigger operating loss, but its stock price rose on high expectation for its metaverse venture.

The poor performances of rookie stocks have spoiled the IPO pipeline this year.

Highly-expectant SK shieldus Co. and One Store Co. under SK square withdrew their IPO plans for the second quarter.

Still debutantes are just off 6 percent versus IPO prices to suggest IPO investment remains lucrative.

IPO prices are set at levels discounted 20 to 40 percent from their anticipated market cap, while the opening price is determined at which the stock first trades upon the opening of an exchange on a trading day.

From the IPO prices, shares of CNTus Sungjin were up 2.96 percent at 5,570 won ($4.36), shares of Life Semantics up 3.47 percent at 7,150 won, and shares of Haisung TPC up 1.36 percent at 7,430 won. Shares of Vuno were up 1.63 percent at 9,980 won while shares of Sunjin Beauty Science up 1.69 percent at 7,220 won in morning trading session on Monday.

By Kang In-seon and Susan Lee

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]