The IPO market freezes, SK Square’s ‘mid-day low’… SK Shielders’ listing withdrawal
SK Square fell to new lows after spin-off listing. SK Shielders, a subsidiary of SK Shields, which recently announced its delisting, pulled down SK Square’s stock price, dropping more than 10% in three trading days.
On May 9, SK Square closed at 45,850 won, down 5.27% from the previous trading day. The share price fell to 45,750 won during the day, recording a new 52-week low.
SK Square is a holding company that was spun off from SK Telecom in 2021 with only non-telecom subsidiaries under the name of a holding company specializing in investment. SK Square was split and relisted on the KOSPI on November 2, last year. At that time, the stock price was 85,000 won, but it fell to the 45,000 won level, effectively ‘halving’.
Previously, its subsidiary SK Shielders withdrew its plan to list on the KOSPI by submitting a notification of withdrawal of IPO on May 6th. It was decided to review the listing as the demand forecast for institutional investors, held for two days on May 3 and 4, did not meet expectations. SK Shielders’ demand forecasting competition ratio was only 200 to 1. This is quite disappointing considering that the demand forecasting competition ratio of Forbypo, which has been evaluated as a recent successful IPO, was about 1800 to 1.
Initially, SK Shielders suffered from continuous overvaluation controversy. Although physical security sales account for about 60% of total sales, more than half of the company’s sales are inflated by cybersecurity companies with high growth value by adding two physical security companies and three cybersecurity companies to the comparison company. There was an opinion. In addition, a US company boasting an excessively large market capitalization was selected from among overseas comparative companies, and as a result of controversy, it was changed to a Taiwanese company and a Korean company. The market capitalization of SK Shielders based on the proposed IPO price is close to 3 trillion won, exceeding the market capitalization of the existing security giant S1 (2.587 trillion won).
With this delisting, SK Square’s subsidiaries, which are about to go public, are expected to receive a negative evaluation as well. Following the listing on the local app market One Store within this year, SK Square has predicted the listing of subsidiaries such as 11st Street, Content Wave, and Tmap Mobility in 2023. One Store is predicted to have a market cap of over 1 trillion won, but, like SK Shielders, there is a controversy over its overvaluation.
As SK Shielders withdraws its listing, the domestic IPO market is expected to freeze further. In 2022, Hyundai Engineering and Voronoi have already withdrawn their IPO plans due to the low participation of institutional investors. In addition, investor sentiment, which has lost interest in the aftermath of the stock market slump, is adding a cold wind to the IPO market. In addition, it is known that about 34.8% of the companies that have been newly listed so far have set their offering price below the lower end of the public offering band (the width between the desired lower limit and the desired upper price). Last year, it was only 12.8%, but this year it has risen sharply.
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