With AstraZeneca, SK Bioscience seeking IPO jackpot

SK Bioscience's L HOUSE vaccine center located in Andong, North Gyeongsang Province / Courtesy of SK Bioscience

By Anna J. Park

Since a deal was reached in July for SK Bioscience to manufacture AstraZeneca's COVID-19 vaccine, the SK affiliate has already managed to produce the vaccine at its Andong L HOUSE vaccine center.

While some vials of the vaccine produced have already been exported, SK Bioscience is working on production for the domestic market after the deal inked recently between the Korean government and the U.K.-based AstraZeneca to produce 25 million doses of its COVID-19 vaccine for local distribution.

Considering that a full-on vaccination process in the country will begin as early as sometime in the first half of next year, SK Bioscience's plan to go public early next year seems "very timely" to raise its corporate value to the fullest.

SK Bioscience selected NH Investment & Securities as its main underwriter firm, while Korea Investment & Securities and Mirae Asset Daewoo are also jointly tapped to lead the IPO process.

The financial industry estimates the value of the vaccine arm of SK Chemical to be around 3 trillion won ($2.77 billion) at the minimum, yet the company's stocks have been traded at around 2.25 million won per share at local over-the-counter markets, helping the firm's market cap to reach around 13.8 trillion won, reflecting the market's fever and interest in the company's business outlook. Its parent company SK Chemical owns about 98 percent of the firm's equity.

Market watchers expect the vaccine firm's public offering will be one of the biggest IPOs of 2021, along with LG Energy Solution, Krafton, Kakao Bank and Kakao Pay. SK Biopharmaceuticals' successful IPO, which yielded a maximum of 450 percent of profits compared to the stock's initial subscription price (49,000 won), has also boosted investors' expectations and confidence in the IPO process of another bio-related SK affiliate.

What is more promising is that unlike SK Biopharmaceuticals, which hadn't started generating profits until its IPO, SK Bioscience is already making solid operating profits. Its annual revenue in 2019 stood at 183.9 billion won and operating profit at 22.8 billion won. During the first three quarters of this year, the company has garnered 158.6 billion won in revenue and 26.8 billion won in operating profit, which led market analysts to predict the firm will record its all-time high performance this year.

"SK Bioscience's year-on-year revenue from its flu vaccine tripled in the third quarter. Given that the COVID-19 vaccine CMO's revenue will start to be reflected in the company's fourth-quarter performance, the firm's fourth-quarter revenue is expected to continue," Lee Tal-mi, analyst at SK Securities, wrote in a recent research paper.

Even without passing the break-even point, SK Biopharmaceuticals' market cap has grown from 3.83 trillion won from the standpoint of the subscription price in mid-June to 13.6 trillion won as of Monday. That's why the corporate value of the vaccine arm of SK ― currently estimated to be more than 3 trillion won ― will grow fast through the successful IPO.

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