Crafton CEO Chang-han Kim, who is about to go public, is paying attention to whether the public offering can calm the bubble controversy. /Photo courtesy of Krafton
Kim Chang-han, CEO of Krafton (47, photo), who is about to go public, is interested in whether the public offering can calm the bubble controversy.
Krafton announced on July 1 that it had lowered its IPO price. According to the revised securities report submitted by Krafton on the same day, the total number of IPO shares was adjusted to 8,654,230, and the desired IPO price per share was adjusted from 400,000 won to 498,000 won. This is about 50,000 won lower than the originally suggested offering price of 458,000 won to 557,000 won.
Earlier, Krafton was embroiled in controversy over its public offering. This is because even if the IPO price is at the bottom of 458,000 won, the corporate value will be 23 trillion won. This greatly exceeds the corporate values of Nexon, NCsoft, and Netmarble.
China risk also raised concerns. In the securities filing, Krafton said, “Our company provides technology services to the game ‘Hwa Pyeong Jung Young’ developed by Tencent and is being serviced in China, and receives a fee according to the profit sharing structure.” When Krafton admitted that it was related to Tencent Games’ game ‘Happy Peace’ by China’s Tencent Games, concerns arose over the high dependence of ‘Battleground’ IP (intellectual property) on sales in China.
However, there is also an optimistic view that having its own IP is enough to be competitive. Krafton’s operating profit margin on a consolidated basis last year was 46%, surpassing all of Nexon (38%), NCsoft (34%) and Netmarble (11%). CEO Kim also said, “Krafton is an unrivaled company that has secured both technology, competitiveness and growth potential through long game production experience and unprecedented success history. We will expand and establish ourselves as a company that leads innovation in the global game industry.”
At the IPO press conference held on July 26, Krafton also confronted the concerns of the ‘China risk’ surrounding the company. Dong-geun Bae, CFO of Krafton, said, “If you say that Krafton is highly dependent on China for sales, it is not at all. It accounts for the majority of our total sales.” He added, “I am confident that concerns about dependence on a specific country will be put to an end through the direct service of ‘Battleground: NEW STATE’, a highly anticipated game in the second half of the year.”
The IPO price of Krafton was finally confirmed at 498,000 won, which is the highest level of the expected range on July 29. ‘Battleground: NEW STATE’, which incorporates Krafton’s advanced technology, is also about to be released.
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