SK Bioscience debuts strong, up 160% from IPO price

SK Bioscience Co., a spin-off from the vaccine division of SK Chemicals, posted a strong debut on Kospi on Mar. 18, closing at 169,000 won a share, up 160% from the initial public offering (IPO) price at 65,000 won.

The stock had opened at 130,000 won, double from the IPO price, before immediately reaching the local bourse’s daily climb limit of 30% at 169,000 won.

The vaccine maker closed the day’s trading as the 28th largest company on Kospi with market capitalization of 12.9 trillion won ($11.5 billion), merely 900 billion won ($803 million) less than the country’s cosmetics giant Amorepacific.

SK Bioscience’s market cap even surpassed that of SK Biopharmaceuticals ranked at 38th on Kospi with 8.7 trillion ($7.7 billion).

“As we promised during the listing process, SK Bioscience will continue to communicate closely with the market and keep up with our principles of transparency, accountability and trust,” said SK Bioscience CEO Ahn Jae-yong at the listing ceremony.

MIXED PROJECTIONS

Despite the strong first-day stock performance of the South Korean vaccine maker, financial analysts covering the industry shared mixed forecasts.

“While the company’s initiative to develop its own COVID-19 vaccine does provide a strong upward momentum in the long run, the current valuation seems quite stretched considering its annual revenue of 200 billion won ($178 million),” commented eBEST Investment & Securities Researcher Yoo Han-hui.

“SK Bioscience manufactures vaccines for AstraZeneca (AZ), yet the stability of AZ vaccines is still controversial. Plus, the exact contract terms between the two firms are unclear. Its long-term valuation will depend on the results of clinical trials, the size of partner companies as well as the degree and financial value of technical partnerships,” agreed Shinyoung Securities Analyst Lee Myung-sun.

Others highlighted that COVID-19 vaccine development and its potential addition to major indexes offer a more positive outlook for the company.

“If SK Bioscience succeeds in developing its own COVID-19 vaccine by the second half of 2022, its market cap can rise quickly to around 16 trillion won ($14.2 billion) or even 25 trillion won ($22.2 billion), just like the global makers CureVac, Novavax and BioNTech,” remarked Eugene Investment & Securities Analyst Han Byung-hwa.

“Multiple revenue streams ranging from flu vaccines, herpes vaccines to COVID-19 contract manufacturing will raise 2021 revenue and operating profit respectively by 316% and 940% versus 2020,” added Han.

“SK Bioscience is likely to be added to Kospi 200 index if it maintains market cap over 5 trillion won ($4.4 billion) by the regular change season in June this year. Like SK Biopharmaceuticals, SK Bioscience can expect an upward stock trend if added to major indexes,” commented Meritz Securities Analst Kim Ji-ha.

Write to Kyeong-je Han at hankyung@hankyung.com
Daniel Cho edited this article.