Major IPO candidate Krafton announces 5:1 stock split

Krafton's representative game images / Courtesy of Krafton

By Anna J. Park

Krafton, one of the most anticipated IPOs for this year, is set to go through a five-to-one stock split at its upcoming shareholders' meeting slated for the end of this month, meaning that every shareholder will receive an additional four shares per held share. The stock split move comes as the global online game company's official IPO process is imminent.

Along with the stock split, the parent company of diverse independent game developer studios ― such as PUBG, Bluehole, RisingWings and Striking Distance ― will also seek acknowledgement on their financial statements, revisions of the firm's articles of association and new appointments of outside directors at the shareholders' meeting on March 31.

Currently, the price of Krafton's yet-listed stock at the over-the-counter (OTC) market platforms is on a swiftly upward trend, upon the IPO anticipation. Its price went up as high as 2.4 million won ($2,135) on Thursday with an estimated market cap of 20 trillion won. This week alone, the price hiked by a double-digit percent from around 1.9 million won on Monday's trading.

Even after the planned five-to-one stock split, market insiders expect the game company to further lower the price by issuing bonus shares to shareholders, in order to facilitate the IPO process.

As the market cap at the OTC market is already nearing the 20 trillion won mark, the company is estimated to become one of the top two Korea-headquartered game developers, alongside NCSOFT. NCSOFT is the country's top market cap company among game developers with a corporate value of 20.6 trillion won, as of Thursday. Another major game company Netmarble's market cap stands at around 10.5 trillion won as of Thursday.

In terms of net profit and performance, Krafton is already threatening NCSOFT and Netmarble. During the first nine months of last year, Krafton's cumulative operating profit stood at 681 billion won, surpassing NCSOFT's 668 billion won and Netmarble's 189 billion won.

According to the industry, the company's revenues and net profits in January and February this year far exceeded its performances for the same period last year, showing around a 30 percent year-on-year increase. The company's online shooting game “PlayerUnknown's Battlegrounds” is a global mega-hit, ranking at the top position for mobile game global downloads in February.

Considering the strong monthly results this year, the firm is expected to choose the IPO timing for the third or fourth quarter this year, aiming to maximize its market value in the KOSPI market.