One Store refiles IPO application, changing peer group list

One Store Co., investment firm SK Square Co.'s homegrown app store, is gearing up for an initial public offering to be held in May. The local app store has proposed a maximum market capitalization of 1.1 trillion won ($898.8 million), setting Tencent Holdings Ltd., Naver Corp., Kakao Corp. and The Nexon Co. as its comparable peer firms. 

One Store submitted the IPO application on March 31 and refiled the application last Thursday with some changes in its public offering timeline and peer group. In the amended application, it postponed the bookbuilding schedule for institutional investors from April 25 and 26 to May 9 and 10. The subscription for retail investors has been rescheduled from May 2-3 to May 12-13. Subscriptions for retail investors will be available via five securities firms -- the two lead managers NH Investment & Securities Co. and KB Securities Co., and co-manager SK Securities; as well as the two underwriters, Hana Financial Investment Co. and Daishin Securities Co.     

In the corrected application, the Korean app store maintained its offering price range between 34,300 and 41,700 won and the number of shares in the IPO as 6.6 million. Its market capitalization, based on the offering price band, is between 910 billion and 1.1 trillion won.

The app store has estimated its corporate value based on a price-to-sales ratio (P/S ratio). The ratio is calculated by dividing the stock price by the firm’s sales per share and the lower the ratio is, the more undervalued the stock is. The IPO's lead managers said the ratio method is appropriate for measuring the corporate value of One Store, sales of which are fast-growing but is still operating at a loss. The company’s annual sales increased from 135.1 billion won in 2019, 155.2 billion won in 2020 to 214.2 billion won in 2021 on a consolidated basis. However, it had operating losses of 5.8 billion won last year due to expanded investment.

In the updated application, the app store changed its peer firms from Google's parent company Alphabet Inc. and Apple Inc. to Tencent, Naver, Kakao and Nexon. The new peer group list is more appropriate for its IPO plan, enhancing clarity for investment risk, a One Store official said. Through a peer group analysis with the new list, One Store applied a 7.3 times P/S ratio and up to a 41.5% discount rate, higher than those of some recent Korean IPOs, to its corporate value estimation.

IPO DEPENDS ON ATTRACTING TOP GLOBAL GAMES

Launched in 2016, One Store is putting a strong emphasis on its 20% app commission, which is lower than the 30% set by both Google Play and Apple’s App Store. Boosted by the low commission, the Korean app store’s average annual sales and transaction volume growth rates reached 25.9% and 26.7%, respectively, as of end-2021.   

The success of the IPO depends on whether it will be able to launch top games globally as games are currently generating the largest app market sales. Two main games released last year, Kakao’s Odin: Valhalla Rising and NCSOFT’s Lineage W, weren't available on One Store but rather Google Play and App Store.

“We are putting effort into sourcing game apps from around 400 local and overseas game developers, including offering reservations for Diablo Immortal by Blizzard Entertainment Inc., a US top game publisher,” said the One Store official.

One Store is planning to use the capital raised via the IPO to build its global app market platform. Also, it will inject funds into strengthening the activation of apps on multiple mobile operating systems, securing intellectual property content, in-app marketing and other promotion businesses.

“In addition to Google Play and App Store, One Store is the other app store with meaningful business size in the global market. We will realize our vision to be a global content platform based on multi-operating systems with a business capacity that has rapidly expanded over the past six years,” said One Store’s Chief Executive Lee Jae-hwan.

Write to Hyun-Ju Jang at blacksea@hankyung.com
Jihyun Kim edited this article.