Doosan Robotics' upcoming IPO draws positive market responses

The Korea Times

The Korea Times

Finance

Wed, November 29, 2023 | 01:00

Markets

Doosan Robotics' upcoming IPO draws positive market responses

Posted : 2023-09-11 15:54

Updated : 2023-09-12 11:58

Robotic arm models developed by Doosan Robotics / Courtesy of Doosan Robotics

By Anna J. Park

The upcoming IPO of Doosan Robotics, the largest public offering candidate for the Korean stock market this year, is facing a buoyed market response over the news that it kicked off a week-long book-building process, Monday.

The market's excitement is also evidenced in the surge of the stock price of Doosan, the parent company of the firm, during Monday's trading session, finishing at 149,100 won ($112), a 27.65 percent jump from the previous session.

Yet, some watchers remain critical of the firm's overly rosy outlook, which could be an exaggerated market value forecast.

Doosan Robotics on Monday began the book-building process for its upcoming IPO, surveying the aggregated amount of demands for shares by institutional investors until Friday. The book-building process will be followed by retail investors' two-day general subscription period for the stocks on Sept. 21 and 22.

The band for the firm's desired offering price ranges from 21,000 won to 26,000 won, which will set the company's market capitalization at the IPO debut standing at around 1.3 trillion won to 1.6 trillion won.

Some market insiders pointed out that the desired offering price is excessively calculated, given that the figure was made by multiplying 38 times from the global industry's average price-to-earnings ratio (PER) to the firm's net profit forecast per share for 2026. They criticize that the firm, which is still recording annual net losses, has set its potential earnings for 2026, rather than the current year, as the basis number to come up with the inordinate market valuation.

In fact, the company logged an annual net loss of 12.5 billion won last year, and later recorded another 9.3 billion won net loss for the first half of this year.

Despite the current losses, however, more stock analysts are positive about the firm's outlook for the medium to long term.

"Excluding China, Doosan Robotics holds a 5.4 percent market share in the global collaborative robot sector, ranking as the world's fourth in the field," said Bae Ki-yeon, an analyst at Meritz Securities. "The company's annual revenue is expected to increase by 460.6 percent to 252 billion won in 2026, from the 45 billion won recorded last year, due mainly to the accelerated growth in the robot arm and solutions sectors."

Bae forecasts the firm to make a turnaround in 2025 with an 8.7 percent operating profit margin for that year, followed by 14 percent in 2026 and 28.6 percent in 2027. The analyst suggests the firm's market capitalization to be 1.9 trillion won, which amounts to 29,000 won per share, much higher than the desired offering price.

Na Seung-doo, a stock analyst from SK Securities, also shared an optimistic view that the company is highly likely to achieve profitability ahead of schedule.

"Considering the growing demand for collaborative robots stemming from imbalances in global labor supply, the company is estimated to make a turnaround quicker than the scheduled timeline. Although nearly 25 percent of the firm's shares will be offered for sale upon the IPO, the recent strong trend in the AI and robotics industries is expected to alleviate the short-term supply pressures," Na said.

As the firm plans to offer about 24.8 percent of its total shares during the IPO process, the estimated amount raised through the offering would be around 340.2 billion won. Doosan, the largest shareholder of the robotics firm, will hold a 68.2 percent stake after the IPO.

While Mirae Asset Securities and Korea Investment & Securities are serving as the lead underwriters of the IPO deal, KB Securities, NH Investment and Credit Suisse are also jointly participating in the underwriting process.

annajpark@koreatimes.co.kr