South Korea’s Doosan Robotics shares jump 127% in trading debut
Shares in South Korea’s Doosan Robotics, whose robots can make coffee and pour beer, more than doubled from their initial public offering (IPO) price in their Seoul market debut on Thursday, amid pent-up demand for robotic stocks.
The company raised 421.2 billion won ($317 million) in South Korea’s largest IPO this year, having priced the shares at 26,000 won each, the top of the price range flagged to investors.
Doosan Robotics shares opened at 59,100 won each, a jump of 127 percent on the IPO price, and rose to as much as 67,600 won in early trade before closing at 51,400 won. The wider market closed down 0.1 percent.
“Due to the recent high market interest in the robot sector, there is a risk of short-term stock price volatility,” said Seo Jae-ho, analyst at DB Financial Investment.
Pent-up demand for robotics stocks have driven shares of smaller rival Rainbow Robotics up 312 percent year-to-date.
Doosan is a leading maker of so-called collaborative robots that work side-by-side with humans and are increasingly used for tasks in cafes and bars.
Doosan’s solid trade debut is a rare bright spot for IPO debutants around the world recently, where many have been sold off immediately or struggled to stay above their issue price in the first few days.
South Korean companies have raised $1.7 billion in new proceeds during the first nine months of 2023, down from $12.7 billion the same period last year, according to LSEG data.
Battery maker LG Energy Solution in 2022 carried out the country’s largest ever IPO when it raised $10.8 billion.
Upcoming IPOs include state-backed Seoul Guarantee Insurance Company with a forecasted valuation of up to 3.4 trillion won, battery materials maker Ecopro Materials, and HD Hyundai Global Service aiming to raise up to $1 billion in the first half of 2024.
ROBOT GROWTH
Investor demand for Doosan Robotic’s IPO was strong in contrast to many recent IPOs, especially in major financial centres like Hong Kong, where the prospect of higher interest rates has soured the sentiment for share sales.
The institutional portion of the deal was covered 272 times according to a Doosan Robotics filing, while retail shareholders bet South Korean market’s largest deposit this year of 33.1 trillion won to take their full entitlement in the deal.
In 2022, Doosan Robotics’ revenue was evenly distributed with North America, Europe and South Korea accounting for about 30 per cent of sales each.
Despite competition with Japan’s Fanuc and Denmark’s Universal Robots, there is a large burgeoning market to penetrate due to population decreases, labour shortages, steep rise in labour costs and reshoring in many countries, said Yang Seung-yoon, analyst at Eugene Investment & Securities.
“It’s good timing for Doosan Robotics to preempt the market by expanding sales and product lineup, as first-comers are likely to be entrenched considering compatibility with existing facilities,” Yang said.
The global robot market is forecasted to grow from $966 million in 2022 to $2.157 billion in 2025, with an annual growth rate of about 36 percent, the company said citing analysis provider Markets and Markets.