Report reveals 95% discrepancy rate, plans checklist and improved disclosures to enhance accuracy
Over the past three years (2022-2024), only 6 out of 105 newly listed companies on KOSDAQ achieved the performance estimates for the year of their listing, accounting for 5.7%. Cases where only some indicators were met reached 15.2%, while 79.1% of companies fell short of estimates across the board.
The Financial Supervisory Service announced this on the 30th through a report titled “Review of the Current State of Public Offering Price Calculation Based on Estimated Performance and Future Response Measures.”
According to the Financial Supervisory Service, 105 KOSDAQ-listed companies calculated their public offering prices based on estimated performance over the past three years (2022-2024), with 93 companies (88.6%) being technology or growth-specialized listings. By sector, healthcare and medical accounted for 40 companies (38.1%), and IT for 38 companies (36.2%).
Most companies (96.2%, or 101 companies) based their estimates on net profit. The most common estimation point was the present value of performance two years after listing.
Additionally, in 31.4% of cases, the closing price on the listing day was lower than the public offering price, accounting for nearly a third of all cases.
Meanwhile, only 6 out of 105 companies (5.7%) fully achieved the performance estimates for the year of their listing. Sixteen companies (15.2%) met only some indicators, while 83 companies (79.1%) fell short of all estimates for sales, operating profit, and net profit.
By year, after the strengthening of disclosure requirements in October 2023, the discrepancy rate for sales of companies listed in 2024 improved slightly. However, discrepancy rates for operating profit and net profit estimates remained high. When classifying the reasons for discrepancy rates exceeding 10% as provided by issuers, “poor business performance” accounted for the largest share.
A comparison of discrepancy rates by underwriter showed that even the same underwriter exhibited significant fluctuations depending on the year and case, indicating a generally unstable trend. In some cases, excessively high performance estimates in specific years led to unusually high discrepancy rates.
To address this, the Financial Supervisory Service plans to prepare a checklist to preemptively identify major factors leading to estimation failures at the securities report stage, supporting issuers and underwriters in making reasonable performance estimates and referencing this during the review process.
To encourage issuers to reduce discrepancy rates, the format of regular reports will be improved to include future discrepancy rate forecasts.
Additionally, by periodically disclosing comparison results of discrepancy rates by underwriter for IPO companies through press releases, investors will be able to directly compare and assess post-listing performance by underwriter, while underwriters will be encouraged to fulfill strict due diligence obligations centered on investor interests.
