This article was published on Feb. 18, 2025, at 4:28 p.m. on the ChosunBiz MoneyMove site.
Eugene Group's robotics and logistics automation subsidiary TXR Robotics has opted for the price-to-sales ratio (PSR) as its method for corporate valuation in the process of listing on the KOSDAQ, making it difficult to avoid controversy over overvaluation. Previously listed Doosan Robotics and Angel Robotics had valued their corporations using the price-to-earnings ratio (PER).
Recently, investment sentiment towards robotics stocks has improved, which may allow for a smooth listing; however, there are concerns that a sudden drop in sentiment could lead to investor losses as the listing date approaches.
According to the investment banking (IB) industry on the 18th, TXR Robotics will conduct institutional investor demand forecasting for its initial public offering (IPO) from the 26th to the 5th of next month. The proposed offering price ranges from 11,500 to 13,500 won. Based on the upper limit of the offering price, the estimated valuation is 208.8 billion won, with an offering size of 41.5 billion won. The lead underwriters for the listing are NH Investment & Securities and Shinhan Investment Corp.
The valuation of 20 billion won is attributed to TXR Robotics using PSR as its evaluation method. PSR indicates how many times a corporation's stock price is relative to its sales per share (SPS). While it is not currently profitable, this method is typically used by companies that are experiencing rapid sales growth.
TXR Robotics evaluated its corporate value by splitting it into robotics and logistics sectors. It listed Yuil Robotics, ROBOTIS, and Neuromeka as comparable companies in the robotics sector and Kornic Automation and Hyundai Movex in the logistics sector.
The value of the robotics business was calculated by multiplying the annualized revenue of 18.3 billion won by the average PSR of 12.56 for comparable companies, while the logistics business value was derived by multiplying revenue of 36.8 billion won by the average PSR of 1.48 for comparable companies. After summing these two values, a discount rate of 36.53% to 25.49% was applied to arrive at the final offering price.
The issue is that previously listed robotics corporations like Doosan Robotics, Angel Robotics, and KNR SYSTEM utilized the price-to-earnings ratio (PER) method for their valuation. This has led to questions about whether TXR Robotics chose the PSR method to inflate its valuation.
If TXR Robotics were evaluated using the PER method with the same comparable companies, its valuation would be around 50 billion won. The average PER of the five companies is 27.4 times. When multiplied by TXR Robotics' annualized net profit of 1.8 billion won, this results in 51.5 billion won. Even this value would decrease when applying a discount rate.
Determining corporate value through the PSR method often leads to controversy over overvaluation since it does not consider profits. The fact that the stock prices of companies like MeatBox Global, dotmill, and Gridwiz, which went public last year with PSR, have fallen below their offering prices adds to the concern. (Related article☞When calculating the offering price based solely on sales, it plummeted after listing... the PSR evaluation method is the worst)
However, there are opinions that TXR Robotics does not appear to be overvalued, especially as the stock prices of robotics companies have recently soared. In fact, if the reference stock price assessment is delayed by just a month, even using the PER method, TXR Robotics' value would surpass 300 billion won. If using the PSR method, it could soar to 640 billion won. Of course, the rapid rise in robotics stocks also presents a substantial risk of decline.
TXR Robotics, which manufactures automatic guided vehicles (AGVs) and autonomous mobile robots (AMRs), has an average annual growth rate (CAGR) of 74% over the past three years (2021-2023). For the third quarter of 2024, its consolidated revenue is projected to be 41.3 billion won, an 83% increase compared to the same period last year.
Currently, TXR Robotics' largest shareholder is Eugene Logistics, holding 50.4% of the equity. The remaining 22% is held by Logitech Holdings, established by Eugene PE for acquisition purposes. EUGENE Corporation owns 100% of the equity in Eugene Logistics.