Korea's COVID-19 test kit maker applies for $1.2 bn IPO

SD Biosensor Inc., South Korea's largest manufacturer of COVID-19 test kits, has applied for an initial public offering to raise up to 1.3 trillion won ($1.2 billion) next month, following its largest-ever quarterly results.

The diagnostic reagent maker plans to offer its shares, including 10 million new issues, at between 66,000 and 85,000 won, according to the registration statement it filed with the Korea Exchange on May 18. Based on the indicative range, it is expected to raise between 1 trillion and 1.3 trillion won in the IPO.

Founded in 2010, SD Biosensor valued itself at 15.2 trillion won, or 14.45 times its full-year net profit between April 2020 and March 2021. The price-to-earnings ratio was based on the average PER of three companies: Seegene Inc. South Korea's No.2 diagnostic reagent manufacturer; and two leading US test kits providers, Thermo Fisher Scientific and PerkinElmer.

The price band reflects the discount rate of 24.2% to 41.1% to its estimated per-share value and compares with Seegen's share price of 80,100 won on the junior Kosdaq market at Tuesday's market close.

Should it price the IPO shares at the top end of 85,000 won, its market capitalization will match the 8.8 trillion won of SK Biopharmaceuticals Co., ranked 43rd on the Korea Exchange and more than four times the 2.1 trillion won of Seegen.

Last year, SD Biosensor posted a 49-fold surge in operating profit to 738.3 billion won from a year earlier. Sales picked up to 1.7 trillion won, a 23-fold jump year-on-year. In the first quarter of this year, the company racked up its largest-ever quarterly results with an operating profit of 576.3 billion won on sales of 1.2 trillion won.

With COVID-19 cases showing little signs of declining, South Korea's vaccination rate remains below 10% as of late May.

SD Biosensor is the last Korean IPO in the billion dollar range to avoid a ban on overlapping subscriptions. Under the new regulation, in effect from later this month, retail investors are prohibited from subscribing to IPO shares via several brokerage companies' branches simultaneously to increase their chances of securing the stock. The oversubscription practice was blamed for the overheated IPO market and some shares' poor performance on their first trading day.

Its bookbuilding is scheduled for June 10-11 and retail subscription due for June 15-16. NH Investment & Securities Co. and Korea Investment & Securities Co. are joint book runners.

Its shares in circulation will amount to 33.17% of the company's total outstanding shares, a smaller amount than other listed companies.

SD Biosensor makes various types of real-time COVID-19 test kits that are exported globally. Its product portfolio includes rapid chromatographic immunoassay kits, reagents, as well as fluorescent immunoassay, which can measure COVID-19 antibodies from a small amount of blood. 

Write to Ye-Jin Jun at ace@hankyung.com
Yeonhee Kim edited this article.