Bulk of Korean IPOs since March 2021 below day one price

Fourteen out of the 17 South Korean companies that made a stock market debut between March 2021 and February of this year are trading below their closing price on day one, with three of them falling below their listing price. 

Their weak performances have signaled cooling investor sentiment toward most high-profile domestic IPOs, which enjoyed high valuations in the liquidity-driven market over the past year. They have now become the target of profit-taking amid concerns about rising interest rates and the fallout of the war in Ukraine. 

Krafton Inc., the developer of the blockbuster battle royale game PlayerUnknown’s Battlegrounds (PUBG), suffered the biggest fall among the 17 IPOs with more than 500 billion won ($410 million) in market value as of March 21, according to a study by The Korea Economic Daily.

On Monday, Krafton shed 3.5% to close at 276,000 won. Since its August 2021 market debut, the stock is down 45% from its listing price of 498,000 won. Mirae Asset Securities underwrote its $3.8 billion IPO.

SK IE Technology Co. (SK IET), a battery separator manufacturer, slid back to its IPO price of 105,000 won on March 15. Its stock price is less than half its all-time high of 249,000 won touched in July 2021, two months after its public listing.

After the March 15 market close, SK IET's Chief Executive Rho Jae-sok scurried to buy back some of the company shares to shore up the share price.

Shares in HK inno.N Corp., a pharmaceutical company, has lost about a quarter of its value. The unit of cosmetics firm Kolmar Korea ended at 45,150 won on Monday, 23% lower than its IPO price of 59,000 won.

Lotte Rental Co., a car rental company, finished at 42,500 won on Monday, 28% below its IPO price of 59,000 won.

By contrast, metaverse-themed stocks notched strong gains among the IPOs over the past year.

Giantstep Inc., a visual effects studio for commercials and movies, has more than quadrupled to 49,850 won as of Monday from its listing price of 11,000 won. Since its Kosdaq debut on March 24, 2021, it delivered the biggest-percentage gain among the 17 high-profile Korean floatations in the past year.

K-pop fandom platform DearU Co., picked as a metaverse stock, closed at 52,700 won on Monday, doubling its IPO price of 26,000 won since its Nov. 10 stock market listing. DearU is part of SM Entertainment Co., the label behind the global sensation BTS.

MIXED PERFORMANCE OF LARGE-CAP STOCKS

LG Energy Solution Ltd., the world's No. 2 electric vehicle battery maker, has been hovering between 350,000 won and 400,000 won since early this month, just above its listing price of 300,000 won. The second-largest stock on Kospi tumbled as low as 355,000 won last week, 40% off its all-time high hit on its first trading day on Jan. 27.

Individual investors have bought a net 542.4 billion won worth of LG Energy so far this month at an average price of 370,000 won.

Kakao Bank Corp. and Kakao Pay Corp., the two main financial arms of the country's top mobile messenger app., are above their issuance prices. But they have been trending lower since their respective public listings on Aug. 6 and Nov. 3 of last year, despite their record-setting IPOs.

In particular, Kakao Pay, a fintech platform, was battered after its former executives, including ex-CEO Alex Young-joon Ryu, dumped the company shares about a month after its market debut.

In response, Korean regulators are working on introducing an IPO lock-up period for company executives and their top shareholders to ban them from selling company shares shortly after their public listing.

Iljin Hysolus Co., a hydrogen storage tank maker, declined 2.07% on Monday to close at 40,700 won.

Still, the stock is 18.3% above its issuance price, but just half its peak of 98,000 won hit in September 2021. Some analysts are optimistic about the stock, saying that hydrogen-themed stocks have upside potential. 

Among the few gainers, Hyundai Heavy Industries Co., the world's largest shipbuilder, closed at 108,500 won on Monday, above its listing price of 60,000 won on Sept. 17 of last year.

The share price of SK Bioscience Co., the country's largest manufacturer of COVID-19 test kits, has more than doubled to 147,000 won on Tuesday since its March 18 debut, when it was listed at 65,000 won.

Write to Yoon-Sang Koh at kys@hankyung.com
Yeonhee Kim edited this article.