Questions are emerging in South Korea’s financial market about whether Musinsa, the nation’s largest online K-fashion platform by sales, is appropriately valued at 8 trillion to 10 trillion won ($5.9 billion to $7.4 billion) ahead of its initial public offering.

Analysts say further earnings growth and financial results will need to be confirmed to justify the valuation.

According to financial investment industry sources Friday, the valuation largely reflects Musinsa’s future growth potential and platform value rather than its current earnings.

At an 8 trillion won valuation, Musinsa’s enterprise value-to-gross merchandise value multiple would be 1.6 times, its enterprise value-to-sales multiple 5.5 times and its enterprise value-to-EBITDA multiple around 34.5 times, based on its 2025 results.

Valuations based on comparable companies also vary widely. Applying enterprise value-to-EBITDA multiples for global e-commerce and apparel companies puts Musinsa’s fair value at 1.6 trillion to 6.4 trillion won. Based on GMV and sales multiples, the valuation ranges from 7.6 trillion to 9 trillion won.

“Further financial results or confirmation of the business structure will be needed to justify a valuation of more than 8 trillion won,” said Cho Kyung-jin, an analyst at IBK Investment & Securities.

Analysts said Musinsa’s private-label business, including Musinsa Standard, should be separated from its platform business when assessing its value, with different multiples applied based on profitability and growth.

If the platform business proves highly profitable, Musinsa could have stronger grounds for a higher multiple than pure retail companies.

Its investment expansion in 2026, however, could weigh on profitability. A key question will be whether operating profit and EBITDA can rebound meaningfully in 2027.

Musinsa could also merit a premium if its overseas GMV and sales continue to grow and its global customer base and brand lineup expand, allowing it to be valued as a global growth platform rather than a domestic fashion commerce company.

Musinsa filed a preliminary application for a listing review with the Korea Exchange on Sept. 7, with its IPO likely timed for the first half of 2027.

The company posted 1.4679 trillion won in consolidated revenue in 2025, up 18.1 percent from 2024. Operating profit rose 36.6 percent to 140.5 billion won, while EBITDA increased 29.6 percent to 232.2 billion won.

In the first half of 2026, revenue rose 22.5 percent to 821.7 billion won, but operating profit fell 11.2 percent to 52.3 billion won. Higher costs related to its overseas business, logistics and offline expansion were cited as reasons for the decline.

The valuation environment for global fashion commerce companies has also become more conservative. Cho cited Chinese fast-fashion company Shein, which went public in Hong Kong at a valuation 75 percent below its previous private-market valuation and saw its shares fall around 9 percent on the first day of trading.

“In Musinsa’s IPO process, it will be important to assess not only GMV growth and market share, but also the sustainability of earnings growth, the profitability of its platform and private-label businesses and the potential for additional growth through global expansion,” Cho said.

By Choi Yeon-jae (ch0221@heraldcorp.com)