Hyundai’s Ship Repair Firm Seeks South Korea’s Largest IPO Since 2022 (2024)

A firm that repairs and manages vessels kicked off what is poised to be the most extensive initial public offering in South Korea in two years, with analysts referring to solid revenue growth as a fundamental attraction.

HD Hyundai Marine Solution Co. and holder KKR & Co. are seeking to raise as much as 742 billion won via a share sale. Following the IPO, the company’s market capitalization is anticipated to hit up to 3.7 trillion won.

The listing will be the largest in the country since the battery giant LG Energy Solution Ltd. in 2022.

Choi Gwang-Shik, a Daol Investment & Securities Co. analyst, declared that the firm will likely see “sharp growth” in profit each year as shipping companies seek to adapt fleets and become more ecologically friendly. Choi started coverage on the stock with a buy rating and a price target that is almost 73% above the top end of the range.

Cargo lines are also racing to overhaul vessels to meet demands from the major customers and lessen emissions, paving the way for regular orders for the firm.

Hyundai Marine can also profit from its association with HD Hyundai Heavy Industries Co., the largest shipbuilder in the world, from which it spun off in 2016.

Hyundai Marine offers parts supply, technical support, and warranty services throughout a ship’s life cycle. It will use the 370 billion won received from the share of the proceeds to create more warehouses worldwide to store its components for retrofit tasks. It kicked off the bookbuilding exercise on Monday and will continue until 22 April.

The firm expects to list on 9 May. KKR is expected to retain a 24.2% stake in the company following this listing.

The shareholder will be able to sell more shares in six months. While the prospects remained powerful, few IPO funds consider Hyundai Marine’s market value of almost 4 trillion won excessive.

Comparisons drawn in the firm’s prospectus to global companies like Alfa Laval AB or Kongsberg Gruppen ASA may be inappropriate since Hyundai Marine Solution is the after-service specialist subsidiary of HD Hyundai, explained Sanghyun Park, an analyst associated with Clepsydra Capital.

The firms listed as comparable peers in the IPO prospectus underwent analysis in terms of their finance and business, a representative of Hyundai Marine declared in response to the queries from Bloomberg.

They were selected based on sales higher than $1 billion during the latest FY and had a steady cash flow through the provision of repairs and retrofitting aid, among others, the company said. But not all are convinced.

Arun George, an analyst associated with Global Equity Research Ltd., believes the valuation method is flawed and plans to give this IPO a pass.

Reference: Bloomberg

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