'Dongdaemun Platform' Dillyshus Pursues Tesla IPO Connecting Wholesalers and Retailers [IPO Close-Up]

Return to Net Profit Last Year, Thanks to Derivative Gains

Optimistic Outlook Includes Growth in Ad Spending and Subscriber Base

Dillyshus, the operator of the fashion B2B platform 'Shinsang Market', is pursuing a listing on KOSDAQ. The company is applying for an IPO through the special listing track for unprofitable companies, commonly referred to as the "Tesla Requirements." This is because its pre-tax loss in the reference year for the preliminary review (2024) amounted to 17.7 billion won, which does not meet the general requirements. Although it returned to an operating profit last year, the IPO price was calculated based on this year's earnings forecast, not past performance. Investors need to examine the remaining gap in performance with respect to quarterly operating margins and annual net income estimates, as well as whether the market can absorb the shares released upon the lifting of lock-up restrictions.

According to the Electronic Disclosure System of the Financial Supervisory Service on July 15, Dillyshus is offering 2.2 million new shares at a price range of 5,000 to 7,000 won per share. Its anticipated market capitalization is between 10.93 billion and 15.3 billion won, with no existing shares being sold by current shareholders.

Shinsang Market is a platform that connects Dongdaemun fashion wholesalers with domestic and overseas online and offline retail businesses. Wholesalers can register products, and retailers can search for and order products via the platform. Building on this transaction base, Dillyshus operates subscription services such as the advertising product 'Shinsang Ad' for wholesalers, 'Shinsang Shipping' which procures and delivers items on behalf of retailers, 'Shinsang Membership' for wholesalers, and 'Plus Membership' for retailers. Advertising and subscription fees are its primary sources of revenue. The platform's level of activity directly determines its financial performance.

Profitability Returns, but Watch for 'Accounting Variables'

The improvement in business performance is evident in the figures. Consolidated revenue increased from 25.1 billion won in 2024 to 30.7 billion won last year, and the operating balance shifted from a 5.7 billion won loss to a 1.6 billion won profit. Net cash flow from operating activities also improved from a net outflow of 3.3 billion won to a net inflow of 6.3 billion won. Net income turned from a 20.4 billion won loss in 2024 to a 3.6 billion won profit last year. In the first quarter of this year, revenue grew 24.4% year-on-year, resulting in 640 million won in operating profit.

However, the return to net profitability should not be regarded as a structural improvement in the core business. The net income of 3.6 billion won last year was primarily due to gains on preferred stock derivatives totaling 10 billion won, which exceeded interest expenses. The net loss of 1.17 billion won in the first quarter of this year was also attributed to about 2 billion won in financial costs from the same preferred stock class. Dillyshus explained, "Excluding this one-off impact, the scale of net loss in the first quarter decreased significantly compared to the same period last year." All of these preferred shares were converted into common shares in February, eliminating the accounting variables that previously impacted profit and loss. The turnaround of total equity from negative 109.2 billion won at the end of last year to 19.2 billion won at the end of the first quarter was also the result of the conversion, not organic business performance.

5.6x Growth Assumed in Operating Profit and Stock Overhang Risk over Three Months

The company's neutral outlook for this year is revenue of 37.2 billion won, operating profit of 9 billion won, and net profit of 7.4 billion won. Korea Investment & Securities, the lead underwriter, applied an adjusted figure of 9.37 billion won for the IPO price calculation, adding back about 2 billion won of one-off preferred stock costs incurred in the first quarter. This assumes operating profit grows to 5.6 times the previous year's 1.6 billion won, with revenue increasing by 6.5 billion won while operating expenses are projected to decrease by 800 million won.

Dillyshus stated that this plan is based on "three key assumptions: an increase in both the number of advertisers and advertising spending per advertiser, expansion of membership subscriptions, and control over personnel expenses, stock-based compensation, and rent." In other words, 7.4 billion won is the company's official target, while the 9.37 billion won figure is specifically for IPO pricing, with one-off expenses added back. If even one of these assumptions falls short, the operating margin target of 24% may not be achievable. The company acknowledged that "the projected net profit is based on optimistic assumptions," but added that "even in a conservative scenario, we expect to maintain a profitable structure for operating and net income through 2026."

Immediately after the IPO, 36.93% of the total shares (8,071,582 shares) will be available for trading. In addition, a significant portion of shares held by investors with more than 1% ownership—including Korea Development Bank, Stonebridge, Naver, and KT-DSC—will be gradually unlocked at a rate of 1.74 to 1.8 million shares per month over one, two, and three months after listing. If performance fails to meet expectations, the released shares may put downward pressure on the stock price. However, the company stated, "Major shareholder and co-CEO Kim Junho (14.48%) is prohibited from selling his shares for two years and six months, and individual IPO subscribers have a put-back option that allows them to sell their allocated shares at 90% of the IPO price for up to three months after listing."

Meanwhile, Dillyshus’s IPO bookbuilding is set for July 23–29, and public subscription will be held for two days from August 3–4.

This content was produced with the assistance of AI translation services.