Initial Thoughts on the Sono International IPO

• Sono International, the largest resort operator in Korea, is getting ready to complete its IPO in 3Q 2025.

• Company is aiming for valuation of about 3 trillion won. Treasury shares accounted for 35.93% of total outstanding shares at the end of 2024.

• One of the noticeable aspects of the company's income statement is that although the company's sales growth was modest from 2019 to 2024, its operating margin growth has been spectacular.

Sono Samcheok resort (Source: Company data)

Income Statement Analysis

Sono International generated sales of 973.5 billion won (down 0.2% YoY), operating profit of 208.1 billion won (down 7.4% YoY), and net profit of 42.5 billion won (down 54.9% YoY) in 2024. Sono International generates one of the highest levels of operating profit in the leisure sector in Korea.

The company's operating profit averaged 197 billion won from 2022 to 2024. Its operating margin averaged 20.5% from 2022 to 2024, up significantly from average operating margin of 0.3% from 2019 to 2021. From 2019 (prior to COVID-19) to 2024, the company's sales growth averaged 11.2% CAGR.

Its operating profit surged higher by more than 37x in this period. One of the noticeable aspects of the company's income statement is that although the company's sales growth was modest from 2019 to 2024, its operating margin growth has been spectacular, suggesting the company's ability to generate higher profits capitalizing on greater economies of scale.