Shares in South Korea’s Doosan Robotics (454910.KS) experienced a remarkable debut on the Seoul market yesterday, more than doubling their initial public offering (IPO) price. The surge, driven by pent-up demand for robotic stocks, marks a significant milestone for the company.
Doosan Robotics successfully raised 421.2 billion won ($317 million), making it South Korea’s largest IPO this year. The shares were priced at the top of the range, at 26,000 won each, in line with what was communicated to investors in advance.
The trading day commenced with a bang as Doosan Robotics shares opened at a staggering 59,100 won each, an astounding 127% leap from the IPO price. Early trade saw the stock reach as high as 67,600 won before settling at 51,400 won at the close of the trading session. This remarkable performance occurred against the backdrop of a modest 0.1% dip in the broader market index, the KS11.
Analysts have cautioned investors about potential short-term stock price volatility due to the heightened market interest in the robot sector. Seo Jae-ho, an analyst at DB Financial Investment, emphasized this risk.
Doosan Robotics specializes in collaborative robots that work alongside humans and are increasingly employed in cafes and bars, automating tasks like coffee-making and beer-pouring. The company’s IPO success is a beacon of hope amidst recent IPOs worldwide, many of which have struggled to maintain their issue price in the initial days of trading.
This robust investor appetite for Doosan Robotics is not an isolated case, as smaller rival Rainbow Robotics (277810. KQ) has seen its shares surge by an astonishing 312% year-to-date, further highlighting the growing interest in the robotics sector.
In terms of regional revenue distribution, Doosan Robotics witnessed a fairly even spread in 2022, with North America, Europe, and South Korea each accounting for approximately 30% of sales. Despite competition from established players like Japan’s Fanuc (6954.T) and Denmark’s Universal Robots, analysts believe there is substantial room for growth in the robotics market due to population declines, labor shortages, rising labor costs, and reshoring efforts in various countries.
Yang Seung-yoon, an analyst at Eugene Investment & Securities, noted, “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.”
According to analysis provider Markets and Markets, the global robot market is forecast to grow from $966 million in 2022 to $2.157 billion in 2025, with an annual growth rate of about 36%.
Doosan Robotics’ impressive market debut stands in contrast to several recent IPOs, particularly in major financial centers like Hong Kong, where concerns about rising interest rates have dampened investor sentiment for share sales.
The institutional portion of Doosan Robotics’ IPO was oversubscribed by a staggering 272 times, as indicated in a company filing. Retail shareholders were equally enthusiastic, contributing to South Korea’s largest deposit this year, amounting to 33.1 trillion won, to secure their full entitlement in the IPO.
Despite a slowdown in IPO activity in South Korea, the market remains active, with upcoming listings including state-backed Seoul Guarantee Insurance Company, battery materials maker Ecopro Materials, and HD Hyundai Global Service, which aims to raise up to $1 billion in the first half of 2024. The IPO market in South Korea has been resilient, with total new proceeds amounting to $1.7 billion in the first nine months of 2023, compared to $12.7 billion during the same period last year.
Doosan Robotics’ stellar IPO performance underscores the growing importance of the robotics industry, driven by the pressing need for automation solutions in various sectors globally. As the company continues to expand its product offerings and capitalize on this burgeoning market, its future prospects appear promising.