Annual operating profit surpassed in just nine months; standalone operating profit also rose by 29%.
Market cap is only 2.4 times cumulative operating profit, highlighting a disconnect between performance and market valuation.
Corporate earnings are rising, yet the market valuation remains modest. Although ITCEN N-Tech (010280) has already exceeded its total annual operating profit from last year within the first three quarters of this year, its market capitalization remains stuck in the 60 billion KRW range. This case raises questions about how effectively the KOSDAQ market, which is intended to support the discovery of growth-oriented companies, translates corporate performance into market valuation.
According to the company's financial report released on the 12th, cumulative consolidated revenue for the first three quarters of this year reached 408.5 billion KRW, with an operating profit of 27.6 billion KRW. These figures represent increases of 8.4% and 157.9%, respectively, compared to the same period last year. The nine-month operating profit has already surpassed last year's annual profit of 20.9 billion KRW by 6.7 billion KRW.
Conversely, based on the closing price of 5,130 KRW on the 12th, the company's market capitalization stands at 66.8 billion KRW. This means the operating profit generated over nine months accounts for 41.3% of the total market cap, valuing the entire company at only about 2.4 times its cumulative operating profit.
Growth in Core Business and Turnaround of Subsidiaries
The improvement in performance was driven by both the core business and its subsidiaries. On a standalone basis, cumulative revenue for the third quarter reached 244.2 billion KRW, with an operating profit of 24.1 billion KRW, up 13.5% and 29.0% respectively from the previous year. The standalone operating profit alone—excluding subsidiary performance—accounts for 36.1% of the market capitalization.
The company attributed the improved profitability to increased revenue from public sector operations and large-scale projects, alongside effective management of selling, general, and administrative (SG&A) expenses at levels comparable to the previous year.
Its subsidiary, ITCEN Cloit, recorded cumulative revenue of 158.2 billion KRW and an operating profit of 2.8 billion KRW. This marks a turnaround from an 8.6 billion KRW operating loss during the same period last year, contributing significantly to the consolidated performance. ITCEN N-Tech is also expanding its business scope into AI services for the public, financial, and educational sectors, alongside improving the profitability of its existing operations.
The Gap Between Performance and Valuation: A Question for the Growth Market
Admittedly, one cannot definitively label a company as undervalued based solely on a simple comparison between operating profit and market capitalization. Factors such as debt, cash holdings, net income attributable to controlling shareholders, and operating cash flow must also be considered, as well as the sustainability of these earnings. Nevertheless, given the simultaneous growth in core business profits and the turnaround of subsidiaries, the gap between performance and market valuation warrants closer examination.
While one company's case cannot define the valuation of the entire KOSDAQ market, it does prompt a reflection on whether the environment is conducive to companies receiving valuations commensurate with their achievements. Protecting growth companies is not about artificially propping up stock prices, but about ensuring that corporate performance translates into shareholder value through transparent information and shareholder returns. Discussions on revitalizing the KOSDAQ must extend beyond listing and fundraising to include post-listing valuation and shareholder protection.
