이 기사는 2022년 04월 06일 08시05분 thebell에 표출된 기사입니다

South Korea’s homegrown app store One Store proposed its initial public offering (IPO) price band that is much lower than market expectations.

One Store will launch its two-day bookbuilding process starting on April 25 to list its shares on the Kospi. The company will invite public subscription on May 2 and 3. It applied for preliminary review to the Korea Exchange in November 2021 and received approval last week.

The app store operator aims to float 6.66 million shares, including 4.725 million new shares and 1.935 shares sold by existing shareholders. New shares will account for about 71% of total shares offered in the IPO. A consortium of SKS Private Equity and Kiwoom Capital will sell some of its 3.87 million shares.

One Store has proposed a price band of 34,300 won ($28.29) and 41,700 won. Based on its IPO stock price guidance, the company’s market capitalization is estimated to be between 914 billion won and 1.1 trillion won, about half the market estimate of 2 trillion won.

NH Investment & Securities and KB Securities are lead underwriters, with SK Securities co-leading the deal. Daishin Securities and Hana Financial Investment have participated in an underwriting syndicate.

One Store seems to have proposed a lower-than-expected price band considering its poor financial performance last year. The company’s operating loss increased to 5.8 billion won in 2021 compared to 900 million won a year earlier. Yet, the company logged 214.2 billion won in revenue in 2021, up 38% from 155.2 billion won in 2020.

If One Store successfully floats its shares, it will be the first mega IPO since LG Energy Solution’s January IPO.

Alphabet, Apple and Kakao as comparable companies

One Store is ranked second in the app market after Google Play Store in Korea in terms of the transaction volume of mobile game apps. The application is available on all Android phones sold by the country’s three major mobile carriers – KT, SK Telecom and LG Uplus.

The company achieved 14 consecutive record-breaking quarterly performance and exceeded 1 trillion won in gross merchandise value (GMV) last year, up 28% from 884.5 billion won in 2020. The company’s GMV has grown at an annual average rate of 18.3% since 2016. Its revenue has also grown at an annual average rate of 14.9% in the same period.

This is the reason why One Store has valued itself based on a price-to-sales ratio (PSR), which is calculated by dividing a company’s market capitalization by its revenue.

One Store has selected Alphabet, Apple and Kakao as its comparable companies. Alphabet’s Google and Apple run their lucrative app stores. Kakao doesn’t operate an app store but is running content business. The company produces original contents based on intellectual property.

Alphabet and Apple had PSR of 6.8 times and 7 times, respectively, while Kakao’s PSR stood at 7.3 times. One Store applied discount rate of 26%-39.1%, which brings its valuation before discount to 1.51 trillion won. (Reporting by Sang-won Lee)