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South Korea's SD Biosensor leaps in Seoul trading debut

Company's COVID test kit success attracts investors amid hot local IPO market

SD Biosensor is attracting investor interest over the performance of its coronavirus testing kits.   © AFP/Jiji

SEOUL -- SD Biosensor rose sharply in its stock market debut on Friday as the South Korean coronavirus test kit maker benefited from a strong business performance and individual investor fever over initial public offerings in the country.

Shares in the Suwon-based company closed up 7.0% at 61,000 won, after starting trading 9.6% higher than the initial public offering price of 52,000 won. Its market cap reached 6.3 trillion won ($5.5 billion), landing it in 59th place among companies listed on the benchmark Kospi index.

SD Biosensor is the third-largest IPO on the Kospi this year, raising 776.4 billion won by offering 14.9 million shares. SK IE Technology, a battery materials company, has topped the IPO chart so far in 2021 by raising 2.2 trillion won in May, followed by drugmaker SK Bioscience, which raised 1.5 trillion won in March.

While most South Korean companies pursued listings in Seoul, Coupang, an e-commerce startup funded by SoftBank, tested its luck on the New York Stock Exchange, raising $4.6 billion in March.

SD Biosensor's listing comes as numerous companies dive into the market keen to ride individual investor enthusiasm for IPOs. Krafton, an online game developer known for PlayerUnknown's Battlegrounds, or PUBG, will accept subscriptions from investors on Aug. 2 and 3, aiming to raise as much as 4.3 trillion won.

Internet company Kakao's two financial subsidiaries -- Kakao Bank and Kakao Pay -- are also preparing for listings next month, aiming to raise up to 2.6 trillion won and 1.6 trillion won, respectively. Kakao Bank is the country's biggest digital lender and is challenging traditional banking rivals by offering quick and easy financial services through its mobile app.

Analysts say that the IPO market on track for a record year, possibly surpassing 2010 when the market raised a combined 10 trillion won led by the listing of Samsung Life Insurance -- the country's biggest IPO ever -- which raised 4.9 trillion won. So far, Seoul's IPO market has raised a combined 5.8 trillion won.

SD Biosensor is one example of the boom. The company, established in 2010, marked 1.5 trillion won of revenue with 585.7 billion won of net profit in 2020. Net profit jumped 418 times from the year before, thanks to exploding demand for its coronavirus testing kit Standard Q.

The company is exporting Standard Q to Europe and India as well as selling it in South Korea. The product can detect coronavirus infection in 10 to 30 minutes. Standard Q has sold 700 million units worldwide as of May, becoming the bestselling such kit in the world, SD Biosensor said.

Analysts say the key issue is whether the company can maintain its level of performance as coronavirus vaccine inoculations increase. The company is aware of that vulnerability and plans to diversify its portfolio.

SD Biosensor said in its registration filing with the financial regulator that it will use the proceedings to "diversify its product portfolio" and hire more researchers.

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