[IPO Microscope] Will Gido Industrial Succeed Amid 'Net Loss and Existing Share Sale' Concerns?

Profits Shaken by Spinoff of Key Subsidiary and Decreased Client Orders
Major Shareholder’s 10 Billion Won Share Sale Places IPO Under Investor Scrutiny

Photo of KIDO VINH factory in Vietnam. Kido Industry

Outdoor apparel original equipment manufacturer (OEM) Kido Industry is moving forward with plans for an initial public offering (IPO) this year, despite having posted a net loss in the first quarter. The weakening of its earnings base due to the spin-off of a profitable subsidiary and a sharp decline in orders from a key client have posed challenges. Nevertheless, investor attention is rising, as the company has set its IPO price based on Last Twelve Months (LTM) net profit.

Kido Industry specializes in manufacturing outdoor and motorcycle apparel, supplying these specialized OEM products to global brands. Its key clients include Harley Davidson, Jack Wolfskin, and MLB (F&F). To reduce labor costs, Kido Industry operates overseas manufacturing subsidiaries in Bangladesh, Vietnam, Myanmar, and Indonesia.

In 2025 on a consolidated basis, Kido Industry recorded sales of 346.6 billion won, operating profit of 32.2 billion won, and net profit of 35.3 billion won. However, in the first quarter of this year, the company posted sales of 65 billion won, operating profit of 400 million won, and a net loss of 3.1 billion won, marking a turnaround to the red compared to the same period last year.

The shift into the red is attributed to changes in Kido Industry's corporate structure. In November last year, Kido Industry carved out its investment business division, which held a 48.7% stake in its subsidiary Kido Sports—engaged in the motorcycle helmet B2C business—and merged it into Kido Sports. Kido Sports had been a highly profitable subsidiary, accounting for about 40% of Kido Industry's net profit. Kido Industry also received several hundred million won in dividends from Kido Sports each year.

Following the spin-off and merger, Kido Sports has become a fully owner-controlled company. The largest shareholder of Kido Sports has shifted from Kido Industry to CEO Park Janghee of Kido Industry (51.53%). The remaining shares are held by Park Jiyoung, CEO of Kido Sports (20.36%), Park Hyungeun (9.05%), and Park’s wife, Seong Jeonghyun (9.05%), all of whom are family members. As a result, Kido Industry can no longer recognize Kido Sports’ profits using the equity method, nor can it receive dividend payouts.

Kido Industry's core business has also encountered performance risks. Jack Wolfskin, which consistently ranked in the top one to two in terms of Kido Industry’s sales, sharply reduced orders after the brand was acquired by China’s Anta Sports in June of last year. Jack Wolfskin’s order volume plummeted from USD 8.4 million in Q1 2025 to just USD 94,000 in Q1 this year—a 99% decrease. This has materialized the risk of a supply chain (vendor) switch following a change in buyer ownership.

A Kido Industry representative stated, "This temporary gap in orders was a result of Anta Sports carrying out its supply chain and volume adjustment plans. Starting in the second quarter, order volumes have begun to recover, and since Anta Sports is aggressively expanding Jack Wolfskin in China, we expect to maintain our collaborative relationship."

Despite this first-quarter loss, Kido Industry has calculated its IPO offering price based on net profit. The company is applying the LTM method, converting the most recent 12 months' net profit into an annualized figure, then multiplying by the price-earnings ratio (PER) of comparable companies. This value reflects the sum of net profits from Q2 2025 through Q1 2026, multiplied by the PER of peer firms.

Kido Industry’s final LTM-adjusted controlling shareholders’ net profit stands at 21.2 billion won, which is the simple LTM net profit of 29.7 billion won minus 8.5 billion won of Kido Sports-related equity-method profit. The company’s earnings per share (EPS) is 3,622 won. Applying the industry average PER of 10.01 and a discount rate ranging from 21.65% to 31.58%, the IPO price target is set at 24,800 to 28,400 won per share. The anticipated market capitalization is estimated at 144.9 billion to 166 billion won.

Peer companies for Kido Industry include Hojun Industries, Youngone Corporation, and Nobrand. PERs for Hojun Industries and Youngone Corporation are 4.94 and 6.24 respectively, but Nobrand’s PER of 18.84 raised the overall average. Nobrand's share price has since declined about 20% from the reference used in Kido Industry's IPO valuation, due to market expectations of slowing earnings, and its PER has dropped to 15 times.

Another noteworthy point is the secondary offering by the owner. Of the 1.7 million shares available in the offering, 20.59%—or 350,000 shares—are being sold by CEO Park Janghee. At the upper end of the proposed IPO price range, this amount equals about 10 billion won. Typically, secondary offerings are viewed negatively by investors, as the IPO funding is seen as going toward the largest shareholder’s personal gains rather than the company's growth.

In response, a Kido Industry representative explained, "A certain quantity of secondary offering is unavoidable in order to meet the shareholder diversification requirement for listing. Even after the IPO, the largest shareholder will retain a 57.86% stake and has pledged a 24-month voluntary lock-up commitment, underscoring their intention for responsible management."

The representative continued, "Following listing, Kido Industry will pursue growth based on order inflows by deepening collaboration with existing buyers and securing new clients, maintaining a higher-than-average operating margin compared to peers. Furthermore, we will gradually raise the dividend payout ratio to around 40% to enhance shareholder value."

Meanwhile, between July 31 and August 6, Kido Industry will conduct demand forecasting for institutional investors and hold public subscription for two days on August 11 and 12. The offering will be co-managed by Mirae Asset Securities and Samsung Securities.

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