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Tesla supplier Myoung Shin tops IPO subscription rates

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By Anna J. Park

Following a bullish run of the nation's benchmark KOSPI since mid-November, another record-breaking number made stock market history with Tesla supplier Myoung Shin Industry's IPO process.

The local automotive parts company that owns unique hot stamping and quenching technology has been gaining much interest from investors, as the firm supplies auto parts for Tesla's Model 3 sedans, along with other car manufacturers including Hyundai Motor and Kia Motors. According to the firm, about 37 percent of the firm's yearly revenue of 775 billion won ($700 million) in 2019 came from Tesla, while the remaining 63 percent came from Hyundai and Kia.

Reflecting the ever-rising global interest in electric vehicles (EVs) and their rosy outlook, Myoung Shin's IPO subscription rate for retail investors reached 1476.64:1, an all-time high for the KOSPI, easily replacing the previous record of 1318.29:1 set in early November with the IPO of Kyochon Chicken.

A total 15.967 trillion won ($14.43 billion) was gathered for the allotment of the firm's shares during the two days on Nov. 27 and 30 at the brokerage firms. The total amount is still much lower than the 58.55 trillion won raised for the allotment of Kakao Games' shares in the IPO subscription period, 58.42 trillion won for Big Hit Entertainment and SK Biopharmaceuticals' 30.98 trillion won. However, considering the firm's smaller market cap size of less than 1 trillion won, the fever around its listing is easily felt.

The firm's allotment competition rate among institutional investors also set the KOSPI's record high of 1196:1. More than 30 percent of the institutional investors also voluntarily agreed to keep a lock-up period, during which they won't sell the stocks.

Based on such interest from retail investors, the stock price was set at 6,500 won per share, much higher than the previously expected price band of between 4,900 won and 5,800 won.

"The firm's strength as a supplier to the top global EV company in North America appealed to major institutional investors from both in and outside of the country. Ample liquidity in the market as well as the booming EV trend following the U.S. presidential election has also been a factor," explained an official from Mirae Asset, the underwriter firm of the IPO.

Market analysts are also optimistic about the firm's continual growth in the near future thanks to expanded supplies made to global EV firms.

"Money raised from the public offering is expected to be invested in assembly and hot stamping line equipment as well as the R&D of eco-friendly auto parts," a report on the company from Heungkuk Securities stated, adding that the firm's revenue generated from global customers will be expanded from 37 percent to 60 percent in 2021.

Founded back in 1982, the firm logged an annual revenue of 344.2 billion won and operating profit of 14 billion won in 2018, and recorded an impressive year-on-year growth last year with 775.7 billion won of annual revenue and 59.6 billion won of operating profit, respectively.

Market watchers expect the fever surrounding the nation's IPO will heat up in December, following the expected successful listing of Myoung Shin Industry.

Altogether, a dozen companies, including Bio firm QuantaMatrix, financial info firm FnGuide, diagnostics company NGeneBio and printed circuit board producer TLB are waiting for their IPOs this month, with 785.1 billion won expected to be raised through the process. The largest IPO among them in the following weeks will be Prestige Biopharma with its market value reaching to about 2 trillion won.


Park Ji-won annajpark@koreatimes.co.kr


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