“The tariff uncertainty from the United States could present a new opportunity for DN Solutions.”
Kim Won-jong, the CEO of DN Solutions, attended a press conference for the initial public offering (IPO) held on the 25th at the Conrad Seoul in Yeouido, where he noted, “While the biggest risk in the IPO market is the tariff war, we have already addressed a significant portion of it.”
Kim emphasized, “Anticipating an era that values 'Made in USA,' we have already categorized the U.S. as a growth market within the company and have increased our local inventory.” He noted that while the company typically maintains 2 to 3 months’ worth of inventory, it currently has 5 months’ worth stored in the U.S.
DN Solutions attracted brief attention as the largest listing candidate in the public offering market this year. This occurred amid rising expectations for the KOSPI listing of the country's largest machine tool manufacturer, which generates over 2 trillion won in annual sales, coinciding with the emergence of tariff uncertainties stemming from U.S. President Donald Trump.
As of 2024, exports account for 80.3% of DN Solutions' sales. It could face a direct hit from the Trump administration's 25% reciprocal tariff 'bombing.' In fact, the market identifies tariff uncertainties as the biggest risk hampering the IPO's success.
Kim stated, “The uncertainties of protectionism and reshaping the supply chain present us with a chance to grow our market share.” He noted that all machine tool corporations competing in the U.S. are not producing machine tools there but are exporting them.
According to Kim, DN Solutions can secure price competitiveness in the tariff war due to its established dealer network. For instance, Japan, regarded as a powerhouse in machine tools, insists on direct sales in the U.S., resulting in supply prices that are higher than DN Solutions.
Kim explained, “DN Solutions typically supplies machine tools for $1 million, with dealers selling them for $1.3 million, while Japan exports at $1.3 million.” He added, “With a lower tariff burden compared to Japanese competitors, this could be an opportunity to increase our market share.”
Kim announced a goal to achieve more than 4 trillion won in annual sales and become the number one in global machine tool market share by 2030. He presented a blueprint to significantly expand the after-sales service (AS) sector, aiming for over 10% sales growth this year alone.
Kim remarked, “Until now, we focused more on expanding sales rather than strengthening the AS sector, but now we are also expanding into service.” He noted that the AS sector generated 100 billion won in sales last year and was crucial in defending the previous year's results with over 50% operating profit margin.
Kim dismissed concerns regarding the overvaluation of DN Solutions' corporate value following its listing. He stated, “While the global machine tool market contracted by 6% last year due to the economic downturn, we were different,” adding, “We in fact grew through the AS sector and other aspects.”
He continued, “This year, there are predictions of growth in the machine tool market due to strengthened investments in the U.S. aerospace sector, European defense industry investments, and India's manufacturing growth,” stating, “The offering price reflects all of these favorable conditions as determined by the lead underwriter.”
Kim indicated plans to pursue additional growth with funds raised from the listing. The company aims to expand into a 'platform' (base service) corporation responsible for factory automation. The plan is to evolve single machine tools into 'smart machines' to implement smart factories.
Finally, Kim emphasized, “Machine tools are referred to as 'mother machines' because they are the machines that make machines,” asserting, “DN Solutions’ listing and growth are essential for the development of the domestic industry based on export manufacturing.”
Meanwhile, DN Solutions aims to list a total of 63,137,073 shares at a price range between 65,000 and 89,700 won per share. Since the 22nd, it has begun demand forecasting for institutional investors and plans to finalize the offering price next week before proceeding with the public subscription for individual investors.
The market capitalization based on the offering price is estimated to be between 4.1 trillion and 5.66 trillion won. Mirae Asset Securities, Samsung Securities, and UBS Securities serve as the lead underwriters, with Korea Investment & Securities and Bank of America Merrill Lynch participating as co-underwriters. The KOSPI listing date is scheduled for May.