SEOUL (Reuters) -Shares of Shift Up rose 33% above their initial public offering price in their South Korean stock market debut on Thursday, after this year's second-largest South Korean IPO that raised 435 billion won ($313 million).

The opening price gave the South Korean gaming company, backed by China's Tencent, a market valuation of about 4.6 trillion won ($3.33 billion).

The country's second major listing so far this year after HD Hyundai Marine Solution in April could further buoy market sentiment and encourage other potential offerings to come to market, analysts said.

South Korea's cumulative IPO issuance so far this year is the highest since 2022 at $1.6 billion, according to LSEG data.

"Mid-sized listings on the KOSPI that had been delayed for nearly two years are resuming recently ... in a positive sign," said Choi Jong-kyung, analyst at Heungkuk Securities.

The retail portion of Shift Up's IPO was oversubscribed more than 300 times, according to the company.

Shift Up reported an operating profit of 111 billion won in 2023 out of 169 billion won in revenue.

Analysts said it has only about 300 employees and utilises various efficient three-dimensional, two-dimensional and AI technologies to make its games, making its cost structure attractive.

The company plans to use IPO proceeds to work on a new game project.

It will also expand its current titles such as mobile and PC game "Goddess of Victory: Nikke" that booked 255 billion won in sales since launching in late 2022 and still maintains a steady user traffic, as well as "Stellar Blade" which hit No. 1 in Japan's PlayStation download rankings and No. 2 in North America after being released in April, analysts said.

($1 = 1,382.8600 won)

(Reporting by Joyce Lee and Scott Murdoch; Additional reporting by Heekyong Yang; Editing by Himani Sarkar and Christopher Cushing)

By Joyce Lee and Scott Murdoch