Concerns have been raised that Theborn Korea individual investors suffered significant investment losses due to the excessive listing efforts of the lead underwriter and the inflated corporate valuation. The owner risk, which had been anticipated before the listing, has materialized, and projections have emerged that business overall will continue to decline.
On the 12th, Independent Research Research Allum published a report titled "Only the lead underwriter laughed, as individual investors were left behind in the true face of Theborn Korea IPO." The stock price outlook was noted as "negative," with a fair price of 19,000 won suggested.
According to Research Allum, Theborn Korea unusually listed on the Korea Composite Stock Price Index (KOSPI) last year as a restaurant franchise company and met the listing requirements based on past performance. During the pricing process, expectations for future growth and profitability were reflected, and it was set at 34,000 won per share; however, it rose nearly 90% compared to the maximum offering price on the listing day but had fallen by nearly 60% based on closing price as of the 9th.
Researcher Choi Seong-hwan emphasized that "this phenomenon is the result of reflecting market expectations and the underestimation of owner risk rather than reasonable value assessment in the pricing process." Despite structural limitations in the franchise sector and a series of delisting cases of existing franchise-listed companies, it is claimed that an overvalued listing occurred, excessively relying on the personal brand value of Paik Jong-won.
Researcher Choi noted, "Nevertheless, the underwriters did not actively reflect this and set a high offering price based on past performance and rosy growth prospects," adding, "The final offering price was set at 34,000 won, far exceeding the hoped-for price band (23,000-28,000 won), ultimately leading to a structural problem where only individual investors who bought at the high point bore the losses due to the stock price plummeting after the listing.
Researcher Choi pointed out that despite the popularity of the public offering and financial stability, a top-level commission was paid in the industry. According to Research Allum, Theborn Korea paid about 4.8% of the total public offering amount (102 billion won) as underwriting fees, amounting to approximately 4.9 billion won. Specifically, Korea Investment & Securities received around 3.5 billion won, while NH Investment & Securities received 1.4 billion won. In the case of Seoul Guarantee Insurance, which raised 181.5 billion won, the underwriting fee rate was 0.45%, even considering its status as a public enterprise and the "tight-fisted fee."
Researcher Choi stated, "This is significantly higher than the average underwriting fee rate for companies listed this year, and generally, such high fee rates apply when the difficulty of achieving a listing is high or when the underwriter actively assumes risk," adding, "The underwriters, Korea Investment & Securities and NH Investment & Securities, were well aware of the risks but boldly decided to set the offering price above the hoped upper band, thus acquiring excessive fees as a reward for this.
This year's revenue is expected to decrease by 11.1% to 412.8 billion won, while operating profit is projected to drop by 38.9% to 22 billion won. At the end of 2024, Theborn Korea was expected to have a total of 3,066 franchises, but with the owner risk of CEO Paik intensifying, it was anticipated to decrease to 2,770 by the end of this year. In fact, Mr. Pizza saw its number of franchises decline by 10.7% in the first year following the founder's controversy in 2016, while the number of franchises for Yeonnam Restaurant plummeted by 28.9% in 2020 due to weakened brand competitiveness.
Researcher Choi remarked, "Theborn Korea recently announced a franchise support policy worth 30 billion won; however, since the specific implementation timing and methods have not been finalized, it was not reflected in this performance outlook," adding, "If the related expense is reflected in the 2025 performance, it is likely to act as an additional factor for decreased profitability. He further noted that the support policy did not present measures regarding the impairment of shareholder value.