Sono International, which built a "resort kingdom" after starting at Daemyung Construction, a Pohang-based builder, may restart its initial public offering (IPO) this year. Attention is focusing on the IPO timetable of Sono International, which said last year it would postpone its market debut. In Aug. last year, Sono International decided to file for a preliminary listing review with the Korea Exchange (KRX) but postponed it.
According to the retail industry on the 27th, Sono International has pushed back its IPO schedule to the first half of 2027. Some predicted the listing could be moved up, citing a bull market in securities this year, but the position for now is that normalizing T'way Air must come first.
Postponing its plan for a market debut in Aug. last year, Sono International said, "This scheduling adjustment is not a simple delay but a proactive choice to solidify the long-term value enhancement of corporations," and added, "Preemptively resolving T'way Air's capital impairment issue is desirable in terms of protecting T'way Air's minority shareholders and, further, shareholders who will become investors in Sono International."
Sono International made this decision because T'way Air's finances are weak. In Dec. last year, T'way Air disclosed a rights offering worth 200 billion won, of which 100 billion won falls to its largest shareholder, Sono International.
Taking over European routes such as Rome, Paris, Barcelona and Frankfurt from Korean Air Lines is in fact a burden for T'way Air. As routes increase, aircraft lease expense inevitably rises, and fuel costs can also grow. The problem is that attracting passengers is not easy due to the exchange rate. When the won is strong (a lower exchange rate), overseas travel becomes more frequent, but when the won is weak, it is hard to decide to travel abroad. The won-euro exchange rate has recently been in the 1,700-won range.
An official at a securities firm said, "If Sono International pushes ahead with an IPO in this situation, there is a problem that the narrative could be distorted." That means it would be hard to impress investors with a future narrative that the company's value could grow with a listing. The official said, "Investors could misinterpret that Sono International, which moved aggressively to support T'way Air, is preparing a listing to raise funds," adding, "The company's position is that there is no need to prepare for a listing at the risk of inviting this kind of misunderstanding."
In fact, some analysis said a listing now would lower the valuation. Even if the resort and hotel business is stable, there could be a discount effect linked to the airline subsidiary. A securities firm official said, "Recently, airline stocks' price-to-earnings ratios are discounted by about 20% to 30% compared with boom times," and added, "In this situation, it should be seen as difficult to win a high valuation and debut on the market."
A retail industry official said, "Maximizing corporate value by linking Sono Hospitality Group's resort businesses at home and abroad with the airline business has long been Chairman Seo Jun-seok's dream," adding, "From the perspective of waiting for the best timing, this was a strategic delay, and the process is expected to resume in the first half of 2027."