South Korea’s conglomerate Kolon Group’s holding company Kolon Corp., and two other key subsidiaries - Kolon Global Corp. and Kolon Industries - are expected to see their shares gain a boost this year on a planned initial public offering of a U.S.-based biopharmaceutical unit and high expectations for stellar performance.

According to the financial industry on Wednesday, U.S.-based TissueGene, Inc., Kolon Corp.’s subsidiary with a 31.5 percent stake, will be listed on Korea’s secondary Kosdaq market by the end of this year. The biopharmaceutical company possesses the original technology for Invossa, a cell therapy product for degenerative arthritis. In May 2015, the state-run the Export-Import Bank of Korea (Korea Eximbank) acquired a 1.1 percent stake in TissueGene at $10 million. Taking account of Korea Eximbank’s stake, 31.5 percent stake held by Kolon could be valued at 320 billion won ($276 million) at least, according to market analysts.

Based on the estimate by local brokerage houses, Kolon stock’s price-earnings ratio (PER), which compares the current share price to the company’s per-share earnings, is currently 19. On Thursday, Kolon stocks inched up 0.6 percent, or 300 won, from the previous session to end at 54,000 won.

Outlook on the group’s construction and retail unit Kolon Global in which Kolon Corp. holds a 62.3 percent stake is also rosy. As the official dealer of Bayerische Motoren Werke AG (BMW) vehicles in Korea, its sales this year are expected to improve following the launch of the German household car brand’s new BMW 5 series in Korea.

Its construction business is also expected to give a boost to the company’s earnings as orders earned around 2015 will be reflected in this year’s earnings. Market analysts forecast operating profit of Kolon Global will surpass 85 billion won in 2017 after posting 60.7 billion won in operating profit in 2016.

Kolon Global stock’s PER is 6, indicating more room to rise. On Thursday, its stocks ended unchanged at 14,650 won.

Business prospects on Kolon Industries, the group’s chemical fiber manufacturing unit, are also bright thanks to expansion of its production capacity and new businesses. It is currently building a tire cord fabrics plant in Vietnam with a capacity of 36,000 tons a year and the company’s mainstay product tire cord’s total output will surge 47 percent after the completion of the plant. The company is also expected to start producing colorless polymide (CPI) film - a key component for the next-generation, flexible display that is foldable - from January, next year. The company’s PER stands at 7, and its shares gained 1.3 percent, or 1,000 won, to 75,700 won on Thursday.

By Hong Jang-won

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