Shares of NS Shopping Co., a South Korean home shopping mall that specializes in food, gave back most of its opening gains in its Seoul market debut on Friday as investors remained cautious over its business outlook.
The shares, which drew attention as the country’s largest initial public offering this year, opened trade at 221,500 won ($200.42), below the top of its marketed range at 235,000 won. They jumped as much as 11.82 percent but shed their earlier gains to close at 215,500 won, up 1.89 percent from the initial price. The benchmark KOSPI slid 0.14 percent.
Its market capitalization came to 726.1 billion won.
The company is 40.17 percent owned by Harim Holdings Co., the nation’s largest poultry producer, and is the fourth home shopping channel to go public on the local bourse.
NS Shopping vowed to diversify its business portfolio through the listing as shoppers are increasingly turning to mobile.
“Starting with TV home shopping in 2001, NS Shopping has grown into an integrated retail company whose businesses include Internet, mobile, interactive TV shopping and catalog,” CEO Do Sang-chul said in a ceremony held at the Korea Exchange. “We will make efforts to fulfill the responsibility (as a listed company) for shareholders.”
The firm posted 390.4 billion won in sales last year, with 80 percent coming from TV channels. Operating and net profit came to 2.5 billion won and 70.8 billion won, respectively, according to its regulatory filing.
While its main customers are those in their 40s and 50s, the company launched a mobile application in November to better reach out to young shoppers with a wider range of non-food items.
Its operating profit ratio is 7.5 percent, higher than its competitors, thanks to the lower return rate of agriculture, fisheries and health food.
Despite its ambitious bid, NS Shopping’s stock performance fell far below other shares that went public last year. Two Samsung Group affiliates, Samsung SDS Co. and Cheil Industries Inc., as well as Cuckoo Electronics, a home appliance maker, soared to the daily limit of 15 percent on their first day of trading.
While investors have preferred IPO shares as a more lucrative option amid low interest rates, NS shares failed to match investor expectations due to lingering concerns over its operating profit and pending approval for its license, which is set to expire in early June.
Local home shopping operators are under close monitoring by the state watchdog after several company officials were accused of receiving kickbacks from their contractors and charging excessive rates.
In the case of NS Shopping, two former employees were caught for falsely reporting sales amounts by fabricating credit card payments.
Others worried the firm’s diversification of sales platforms will worsen its operating profit this year.
“NS Shopping’s operating profit is higher than three other home shopping operators, but its shares don’t seem attractive,” Hong Sung-soo, a researcher at NH Investment & Securities, said. “Its sales ratio via TV channels is 74 percent, which is much higher than other channels. If it expands its sales channels to online and mobile, its operating profit will decline.” (Yonhap)
