Lumir IPO Valuation Analysis

• Base case valuation of Lumir is target price of 18,542 won per share. Given the low upside relative to IPO price range, we have a Negative view of this IPO.

• Our net profit estimates in 2025 and 2026 are 38% and 63.3% lower than the company's estimates, respectively.

• Lumir provides key technologies for satellite systems, including small synthetic aperture radar (SAR) satellite systems and payloads.

Income Statement Estimates

We estimate Lumir to generate sales of 20.7 billion won (up 70.5% YoY) in 2024, 37.1 billion won (up 79.3% YoY) in 2025, and 65.1 billion won (up 75.7% YoY) in 2026. We estimate the company's gross margins to improve from -6% in 2023 to 16.4% in 2024 and 22% in 2025. We also estimate its operating margins to increase from -24.9% in 2023 to 1.9% in 2024, 10.4% in 2025, and 15.8% in 2026.

• The improvement in profit margins are driven by much higher sales and lower cost of sales and SG&A as a percentage of sales.

• COGS as a percentage of sales is estimated to decline from 106% in 2023 to 83.6% in 2024 and 78% in 2025.

• SG&A as a percentage of sales is also estimated to decline from 18.9% in 2023 to 14.5% in 2024 and 11.6% in 2025.

• The company has already proven that it could scale up its business rapidly.

  • For example, Lumir's cost of sales as a percentage of sales declined from 169.2% in 1H 2023 to 88% in 1H 2024.

  • SG&A as a percentage of sales also declined from 80% in 1H 2023 to 14.8% in 1H 2024.

• Our earnings forecasts are more conservative than the company's estimates. Our sales estimates in 2025 and 2026 are 11.7% and 25.7% lower than the company's estimates, respectively.

• Our net profit estimates in 2025 and 2026 are 38% and 63.3% lower than the company's estimates, respectively.

Source: Company data, Our Estimates

Source: Company data, Our Estimates