APAC IPOs & Placements

Zhen Zhou, Toh

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

HD Hyundai Heavy Industries  / Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/hyundai-heavy-industries-co-ltd" target="_blank" data-smartkarma-citation="entities:33808:1" rel="noopener">Hyundai Heavy Industries (1748326D KS)</a> is looking to raise up to US$925m in its Korea IPO. </p></div><div>
<p>Hyundai Heavy Industries (HHI) is a South Korea shipbuilder. The company is wholly owned by <a href="https://www.smartkarma.com/entities/korea-shipbuilding-offshore-engineering-co-ltd" target="_blank" data-smartkarma-citation="entities:10155:1" rel="noopener">Korea Shipbuilding &amp; Offshore Engineering (009540 KS)</a>  after the latter’s spin-off in 2019.</p>
<p>In this note, we share our final thoughts on valuation and deal dynamics.</p>
</div><p>Our previous coverage of the IPO:</p><ul><li dir="ltr" aria-level="1"><p><a href="https://www.smartkarma.com/insights/hyundai-heavy-ipo-sharp-1h21-recovery-accompanied-with-a-surge-in-costs" target="_blank" data-smartkarma-citation="insights:56070" rel="noopener">Hyundai Heavy IPO - Sharp 1H21 Recovery Accompanied with a Surge in Costs</a> </p></li></ul>

Hyundai Heavy Industries (1748326D KS) is looking to raise up to US$925m in its Korea IPO. 
Hyundai Heavy Industries (HHI) is a South Korea shipbuilder. The company is wholly owned by Korea Shipbuilding &amp; Offshore Engineering (009540 KS)  after the latter’s spin-off in 2019.
In this note, we share our final thoughts on valuation and deal dynamics.
Our previous coverage of the IPO:Hyundai Heavy IPO - Sharp 1H21 Recovery Accompanied with a Surge in Costs 

Hyundai Heavy IPO - Expensive Valuation and Korea Shipbuilders Have Been Trading Weak

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<div class="content-highlight">
<p>Our base case valuation of Hyundai Heavy Industries is implied market cap of 5.9 trillion won or 66,573 won per share, which is 11% higher than the high end of the IPO price range of 60,000 won per share.</p>
<p>Typically, we like to rate an IPO positive if our base case valuation is at least 15% higher than the high end of the IPO price range and as such we have a NEGATIVE view of this IPO. The valuation sits on the borderline case and our base case valuation does not provide a big upside to the IPO price range. </p>
</div><p>Our base case valuation is based on 1x our estimated equity of 6.1 trillion won for the company at the end of 2021. Our valuation multiple of 1.0x P/B is based on the average P/B valuation multiple of the peers.</p><p>HHI had 22.7% market share of new orders for shipbuilding in 2020, rising to 24.1% in 1Q 2021. It had new orders of 3,2m GT in 1Q 2021, which was nearly 84% of total new orders in 2020. </p>


Our base case valuation of Hyundai Heavy Industries is implied market cap of 5.9 trillion won or 66,573 won per share, which is 11% higher than the high end of the IPO price range of 60,000 won per share.
Typically, we like to rate an IPO positive if our base case valuation is at least 15% higher than the high end of the IPO price range and as such we have a NEGATIVE view of this IPO. The valuation sits on the borderline case and our base case valuation does not provide a big upside to the IPO price range. 
Our base case valuation is based on 1x our estimated equity of 6.1 trillion won for the company at the end of 2021. Our valuation multiple of 1.0x P/B is based on the average P/B valuation multiple of the peers.HHI had 22.7% market share of new orders for shipbuilding in 2020, rising to 24.1% in 1Q 2021. It had new orders of 3,2m GT in 1Q 2021, which was nearly 84% of total new orders in 2020. 

Hyundai Heavy Industries IPO Valuation Analysis

<p><a href="https://www.smartkarma.com/entities/hyundai-heavy-industries-co-ltd" target="_blank" data-smartkarma-citation="entities:33808:1" rel="noopener">Hyundai Heavy Industries (1748326D KS)</a>  is looking to raise up to US$942m in its upcoming Korea IPO. </p><p>Hyundai Heavy Industries (HHI) is a South Korea shipbuilder. The company is wholly owned by <a href="https://www.smartkarma.com/entities/korea-shipbuilding-offshore-engineering-co-ltd" target="_blank" data-smartkarma-citation="entities:10155:1" rel="noopener">Korea Shipbuilding &amp; Offshore Engineering (009540 KS)</a>  after the latter’s spin-off in 2019.</p>

Hyundai Heavy Industries (1748326D KS)  is looking to raise up to US$942m in its upcoming Korea IPO. Hyundai Heavy Industries (HHI) is a South Korea shipbuilder. The company is wholly owned by Korea Shipbuilding &amp; Offshore Engineering (009540 KS)  after the latter’s spin-off in 2019.

Hyundai Heavy IPO - Sharp 1H21 Recovery Accompanied with a Surge in Costs

<div class="content-highlight">
<p>Hyundai Heavy Industries is getting ready to complete its IPO in Korea in September. The IPO price range is from 52,000 won to 60,000 won per share. At the high end of the IPO price range, the IPO offering is 1.08 trillion won ($947 million) in size.</p>
<p>The IPO offering includes 18 million new shares. Korea Shipbuilding &amp; Offshore Engineering (009540 KS) owns a 100% stake in Hyundai Heavy Industries. The book building for the institutional investors starts on 2 September. </p>
</div><ul>
<li>The proceeds from the IPO will be used to invest in the development of eco-friendly technologies to strengthen Hyundai Heavy Industries' future competitiveness.</li>
<li>With this funding, Hyundai Heavy Industries plans to speed up research and development of eco-friendly ships in preparation for the carbon-free era, such as hydrogen/ammonia ships, electric propulsion solutions, and gas ship cargo holds, and to advance AI-based smart ships and autonomous navigation technologies.</li>
<li>In addition, it plans to build a safe and efficient smart shipyard by introducing an intelligent automation system and data-based operating system.</li>
</ul>


Hyundai Heavy Industries is getting ready to complete its IPO in Korea in September. The IPO price range is from 52,000 won to 60,000 won per share. At the high end of the IPO price range, the IPO offering is 1.08 trillion won ($947 million) in size.
The IPO offering includes 18 million new shares. Korea Shipbuilding &amp; Offshore Engineering (009540 KS) owns a 100% stake in Hyundai Heavy Industries. The book building for the institutional investors starts on 2 September. 

The proceeds from the IPO will be used to invest in the development of eco-friendly technologies to strengthen Hyundai Heavy Industries' future competitiveness.
With this funding, Hyundai Heavy Industries plans to speed up research and development of eco-friendly ships in preparation for the carbon-free era, such as hydrogen/ammonia ships, electric propulsion solutions, and gas ship cargo holds, and to advance AI-based smart ships and autonomous navigation technologies.
In addition, it plans to build a safe and efficient smart shipyard by introducing an intelligent automation system and data-based operating system.


Korea / Special Sits, Pairs, Index Rebalancing, Clepsydra Capital

Sanghyun Park

Korea / Special Sits, Pairs, Index Rebalancing

Clepsydra Capital

Investigate special situations, pairs, and index rebalancing trades in Korea.

HD Korea Shipbuilding & Offshore Engineering / Equity Capital Markets

HD Korea Shipbuilding & Offshore Engineering

<div><div><h2>Offering size</h2></div></div><div><p>Hyundai Heavy Industries (HHI) offers 18M shares, which account for 25.43% of the pre-IPO total shares, of which 55-75% are allocated to institutions. It will be listed on KOSPI.</p></div><table class="table table-striped">
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<col width="100">
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<tbody>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Offering size"}'>Offering size</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Ticker"}'>Ticker</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"329180"}' data-sheets-numberformat='{"1":2,"2":"[$₩-412]#,##0","3":1}' data-sheets-formula="=R[1]C[-2]">329180</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Bourse"}'>Bourse</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"KOSPI"}'>KOSPI</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Offering"}'><strong>Offering</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":8654230}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'><strong>18,000,000</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"- % of SO"}'><strong>- % of pre-IPO SO</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.25433386315786916}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=Terms!R[5]C[-2]"><strong>25.43%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"- Institutional allotment"}'><strong>- Institutional allotment</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"55.00~75.00%"}' data-sheets-formula="=Terms!R[5]C[-2]"><strong>55.00~75.00%</strong></td>
</tr>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table><div class="content-highlight">
<p><strong>Who is HHI?</strong></p>
<ul>
<li>HHI is the world's largest shipbuilding company based in Korea. Since its establishment in 1973, it has maintained the No. 1 position in the global shipbuilding market since 1983.</li>
<li>Prior to the establishment of the holding company in 2017, Hyundai Heavy Industries was at the apex of a circular shareholding structure that led to Chung Mong-jun (owner) → Hyundai Heavy Industries → Hyundai Samho Heavy Industries → Hyundai Mipo Dockyard → Hyundai Heavy Industries.</li>
<li>In June 2019, Hyundai Heavy Industries conducted a physical division to take over Daewoo Shipbuilding &amp; Marine Engineering. It was divided into an intermediate holding company, Korea Shipbuilding &amp; Offshore Engineering (KSOE), and an operating company, Hyundai Heavy Industries. For this reason, KSOE currently owns 100% of HHI.</li>
</ul>
</div><div><div><h2>Split</h2></div></div><div>
<p>This IPO is a 100% primary offering. As a result, this offering will see a capital increase rate of 25.43% with a shareholding dilution of 20.28%. This event is free of any additional options: cornerstone, clawback, or greenshoe.</p>
<table class="table table-striped">
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<col width="100">
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<tbody>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Split"}'>Split</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Primary %"}'><strong>Primary %</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=Terms!R[3]C[-2]"><strong>100.00%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Secondary %"}'>Secondary %</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=Terms!R[4]C[-2]">0.00%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Capital increase rate"}'><strong>Capital increase rate</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.25433386315786916}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=Terms!R[4]C[-2]"><strong>25.43%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Dilution"}'>Dilution</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.20276408907399399}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=Terms!R[4]C[-2]">20.28%</td>
</tr>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table>
</div><div><div></div></div><div>
<div><div><h2>Schedule</h2></div></div>
<div>
<p>The book opens on August 26 (September 2 for local institutions) and runs until September 3. The allotment will be on September 6, finalizing an offering price. The subscription falls on September 7.</p>
<table class="table table-striped">
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<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Schedule"}'>Schedule</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Book open"}'><strong>Book open</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44434}' data-sheets-numberformat='{"1":5,"2":"yyyy\". \"mm\". \"dd","3":1}'><strong>2021. 08. 26</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Book close"}'>Book close</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44442}' data-sheets-numberformat='{"1":5,"2":"yyyy\". \"mm\". \"dd","3":1}'>2021. 09. 03</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Allotment"}'><strong>Allotment</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44445}' data-sheets-numberformat='{"1":5,"2":"yyyy\". \"mm\". \"dd","3":1}'><strong>2021. 09. 06</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Subscription"}'><strong>Subscription</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44446}' data-sheets-numberformat='{"1":5,"2":"yyyy\". \"mm\". \"dd","3":1}'><strong>2021. 09. 07</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Payment"}'>Payment</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44449}' data-sheets-numberformat='{"1":5,"2":"yyyy\". \"mm\". \"dd","3":1}'>2021. 09. 10</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Listing"}'>Listing</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}'>-</td>
</tr>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table>
<div><div><h2>Pricing</h2></div></div>
<div><p>This IPO also uses PBR. The corporate value was determined after selecting the following five companies (one from Korea and four from China):</p></div>
<div><ol style="list-style-type: decimal;">
<li><a href="https://www.smartkarma.com/entities/daewoo-shipbuilding-marine-engineering" target="_blank" data-smartkarma-citation="entities:12531:1" rel="noopener">Daewoo Shipbuilding &amp; Marine Engineering (042660 KS)</a></li>
<li><a href="https://www.smartkarma.com/entities/china-shipbuilding-industry-co-ltd" target="_blank" data-smartkarma-citation="entities:5789:1" rel="noopener">China Shipbuilding Industry (601989 CH)</a></li>
<li>
<a href="https://www.smartkarma.com/entities/china-cssc-holdings-ltd-a" target="_blank" data-smartkarma-citation="entities:2464:1" rel="noopener">China CSSC Holdings Ltd A (600150 CH)</a> </li>
<li>
<a href="https://www.smartkarma.com/entities/yangzijiang-shipbuilding-holdings-limited" target="_blank" data-smartkarma-citation="entities:660:1" rel="noopener">Yangzijiang Shipbuilding (YZJSGD SP)</a> </li>
<li>
<a href="https://www.smartkarma.com/entities/cssc-offshore-marine-engg-group-co-ltd" target="_blank" data-smartkarma-citation="entities:5089:1" rel="noopener">Cssc Offshore &amp; Marine Engg Group (317 HK)</a> </li>
</ol></div>
<div>
<p>The <strong>average P/B multiple</strong> of these five valuation peers come at <strong>1.12x</strong> based on their 1Q21 financials.</p>
<table class="table table-striped">
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<col width="100">
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<col width="100">
<col width="100">
<col width="100">
<col width="100">
<col width="100">
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<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"FY2021 1Q based annualized net earnings based P/E"}'>As of FY2021 1Q</td>
<td data-sheets-value='{"1":2,"2":"Note"}'>Note</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"DSME"}'>DSME</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"China Shipbuilding Industry Company Ltd"}'>China Shipbuilding Industry Company Ltd</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"China CSSC Holdings Ltd"}'>China CSSC Holdings Ltd</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Yangzijiang Shipbuilding Holdings Ltd"}'>Yangzijiang Shipbuilding Holdings Ltd</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"CSSC Offshore and Marine Engineering Group Co Ltd"}'>CSSC Offshore and Marine Engineering Group Co Ltd</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Equity"}'>Equity</td>
<td data-sheets-value='{"1":2,"2":"A"}'>A</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":3635.589}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]'>₩3,635.6B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":15324.249}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]'>₩15,324.2B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":9411.029}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]'>₩9,411.0B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":6066.149}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]'>₩6,066.1B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":3057.162}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]'>₩3,057.2B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Non controlling interest"}'>Non-controlling interest</td>
<td data-sheets-value='{"1":2,"2":"B"}'>B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]'>₩0.0B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":157.608}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]'>₩157.6B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1247.454}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]'>₩1,247.5B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":186.08}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]'>₩186.1B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":550.639}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]'>₩550.6B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Applied equity"}'>Applied equity</td>
<td data-sheets-value='{"1":2,"2":"C=A-B"}'>C=A-B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":3635.589}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]' data-sheets-formula="=R[-2]C[0]-R[-1]C[0]">₩3,635.6B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":15166.641}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]' data-sheets-formula="=R[-2]C[0]-R[-1]C[0]">₩15,166.6B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":8163.575000000001}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]' data-sheets-formula="=R[-2]C[0]-R[-1]C[0]">₩8,163.6B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":5880.069}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]' data-sheets-formula="=R[-2]C[0]-R[-1]C[0]">₩5,880.1B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":2506.5229999999997}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]' data-sheets-formula="=R[-2]C[0]-R[-1]C[0]">₩2,506.5B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Reference market cap"}'>Reference market cap</td>
<td data-sheets-value='{"1":2,"2":"D"}'>D</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":3401.114}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]'>₩3,401.1B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":15590.917}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]'>₩15,590.9B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":11966.681}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]'>₩11,966.7B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":4552.47}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]'>₩4,552.5B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":3504.253}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]'>₩3,504.3B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"PBR"}'><strong>PBR</strong></td>
<td data-sheets-value='{"1":2,"2":"E=D÷C"}'><strong>E=D÷C</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.94}' data-sheets-numberformat='[null,2,"0.00x"]'><strong>0.94x</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1.03}' data-sheets-numberformat='[null,2,"0.00x"]'><strong>1.03x</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1.47}' data-sheets-numberformat='[null,2,"0.00x"]'><strong>1.47x</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.77}' data-sheets-numberformat='[null,2,"0.00x"]'><strong>0.77x</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1.4}' data-sheets-numberformat='[null,2,"0.00x"]'><strong>1.40x</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Average PBR"}'><strong>Average PBR</strong></td>
<td data-sheets-value='{"1":2,"2":"-"}'><strong>-</strong></td>
<td colspan="5" rowspan="1" style="text-align: center;" data-sheets-value='{"1":3,"3":1.12}' data-sheets-numberformat='[null,2,"0.00x"]'><strong>1.12x</strong></td>
</tr>
<tr><td colspan="7" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table>
<p>The averaged P/B multiple of 1.12x was applied to HHI's equity of ₩5,035.7B from the second quarter of this year. Then, an IPO flow of ₩936.0B (at the lower end of the indicative price band) was added. As a result, we have <strong>a reference market cap of ₩6.58T</strong>, giving <strong>a price per share of ₩74,094</strong>.</p>
</div>
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<col width="100">
<col width="100">
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<tbody>
<tr><td colspan="3" style="width: 719.119px;" data-sheets-value='{"1":2,"2":"P/E valuation"}'>HHI: P/B valuation</td></tr>
<tr>
<td style="width: 239.702px;" data-sheets-value='{"1":2,"2":"Average PBR"}'>Average PBR</td>
<td style="width: 161.804px;" data-sheets-value='{"1":2,"2":"A"}'>A</td>
<td style="text-align: right; width: 317.614px;" data-sheets-value='{"1":3,"3":1.12}' data-sheets-numberformat='[null,2,"0.00x"]' data-sheets-formula="=R[-4]C[0]">1.12x</td>
</tr>
<tr>
<td style="width: 239.702px;" data-sheets-value='{"1":2,"2":"Applied equity"}'><strong>Applied equity</strong></td>
<td style="width: 161.804px;" data-sheets-value='{"1":2,"2":"B"}'><strong>B</strong></td>
<td style="text-align: right; width: 317.614px;" data-sheets-value='{"1":3,"3":5035.677}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]'><strong>₩5,035.7B</strong></td>
</tr>
<tr>
<td style="width: 239.702px;" data-sheets-value='{"1":2,"2":"IPO inflow"}'><strong>IPO inflow</strong></td>
<td style="width: 161.804px;" data-sheets-value='{"1":2,"2":"C"}'><strong>C</strong></td>
<td style="text-align: right; width: 317.614px;" data-sheets-value='{"1":3,"3":936}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]'><strong>₩936.0B</strong></td>
</tr>
<tr>
<td style="width: 239.702px;" data-sheets-value='{"1":2,"2":"Reference market cap"}'><strong>Reference market cap</strong></td>
<td style="width: 161.804px;" data-sheets-value='{"1":2,"2":"D=(AxB)+C"}'><strong>D=(AxB)+C</strong></td>
<td style="text-align: right; width: 317.614px;" data-sheets-value='{"1":3,"3":6577.587}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]'><strong>₩6,577.6B</strong></td>
</tr>
<tr>
<td style="width: 239.702px;" data-sheets-value='{"1":2,"2":"Post-IPO SO"}'>Post-IPO SO</td>
<td style="width: 161.804px;" data-sheets-value='{"1":2,"2":"E"}'>E</td>
<td style="text-align: right; width: 317.614px;" data-sheets-value='{"1":3,"3":88773116}' data-sheets-numberformat='[null,2,"#,##0",1]'>88,773,116</td>
</tr>
<tr>
<td style="width: 239.702px;" data-sheets-value='{"1":2,"2":"Price per share"}'><strong>Price per share</strong></td>
<td style="width: 161.804px;" data-sheets-value='{"1":2,"2":"F=D÷E"}'><strong>F=D÷E</strong></td>
<td style="text-align: right; width: 317.614px;" data-sheets-value='{"1":3,"3":74094}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}'><strong>₩74,094</strong></td>
</tr>
<tr><td colspan="3" style="width: 719.119px;" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table>
<p>The <strong>indicative price band</strong> lies between <strong>₩52,000 and ₩60,000</strong>. This is obtained by applying a <strong>discount rate of</strong><strong>19.02% to 29.82%</strong> to the market cap of ₩6.58T calculated through PBR. This much discount gives a <strong>P/B multiple of 0.77x to 0.89x</strong>.</p>
<table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"Pricing"}'>Pricing</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Low"}'>Low</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"High"}'>High</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Price"}'><strong>Price</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":52000}' data-sheets-numberformat='[null,2,"[$₩-412]#,##0",1]'><strong>₩52,000</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":60000}' data-sheets-numberformat='[null,2,"[$₩-412]#,##0",1]'><strong>₩60,000</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Base deal size"}'>Base deal size</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":936}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]' data-sheets-formula="=R[-1]C[0]*Terms!R8C2/1000000000">₩936.0B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1080}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]' data-sheets-formula="=R[-1]C[0]*Terms!R8C2/1000000000">₩1,080.0B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Institutional allotment (55%)"}'>- Institutional allotment (55%)</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":514.8000000000001}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]' data-sheets-formula="=R[-1]C[0]*55%">₩514.8B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":594}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]' data-sheets-formula="=R[-1]C[0]*55%">₩594.0B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Implied market cap"}'>Implied market cap</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":4616.202032}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]' data-sheets-formula="=R[-3]C[0]*R23C3/1000000000">₩4,616.2B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":5326.38696}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]' data-sheets-formula="=R[-3]C[0]*R23C3/1000000000">₩5,326.4B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Discount"}'><strong>- Discount</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.2981887872162388}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=(R24C3-R[-4]C[0])/R24C3"><strong>29.82%</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.1902178314033525}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=(R24C3-R[-4]C[0])/R24C3"><strong>19.02%</strong></td>
</tr>
<tr>
<td><strong>Implied PBR</strong></td>
<td style="text-align: right;"><strong>0.77x</strong></td>
<td style="text-align: right;"><strong>0.89x</strong></td>
</tr>
<tr><td colspan="3" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table>
</div>
</div>

Offering sizeHyundai Heavy Industries (HHI) offers 18M shares, which account for 25.43% of the pre-IPO total shares, of which 55-75% are allocated to institutions. It will be listed on KOSPI.





Offering size

Ticker
329180


Bourse
KOSPI


Offering
18,000,000


- % of pre-IPO SO
25.43%


- Institutional allotment
55.00~75.00%

Source: DART


Who is HHI?

HHI is the world's largest shipbuilding company based in Korea. Since its establishment in 1973, it has maintained the No. 1 position in the global shipbuilding market since 1983.
Prior to the establishment of the holding company in 2017, Hyundai Heavy Industries was at the apex of a circular shareholding structure that led to Chung Mong-jun (owner) → Hyundai Heavy Industries → Hyundai Samho Heavy Industries → Hyundai Mipo Dockyard → Hyundai Heavy Industries.
In June 2019, Hyundai Heavy Industries conducted a physical division to take over Daewoo Shipbuilding &amp; Marine Engineering. It was divided into an intermediate holding company, Korea Shipbuilding &amp; Offshore Engineering (KSOE), and an operating company, Hyundai Heavy Industries. For this reason, KSOE currently owns 100% of HHI.

Split
This IPO is a 100% primary offering. As a result, this offering will see a capital increase rate of 25.43% with a shareholding dilution of 20.28%. This event is free of any additional options: cornerstone, clawback, or greenshoe.






Split

Primary %
100.00%


Secondary %
0.00%


Capital increase rate
25.43%


Dilution
20.28%

Source: DART



Schedule

The book opens on August 26 (September 2 for local institutions) and runs until September 3. The allotment will be on September 6, finalizing an offering price. The subscription falls on September 7.






Schedule

Book open
2021. 08. 26


Book close
2021. 09. 03


Allotment
2021. 09. 06


Subscription
2021. 09. 07


Payment
2021. 09. 10


Listing
-

Source: DART


Pricing
This IPO also uses PBR. The corporate value was determined after selecting the following five companies (one from Korea and four from China):

Daewoo Shipbuilding &amp; Marine Engineering (042660 KS)
China Shipbuilding Industry (601989 CH)

China CSSC Holdings Ltd A (600150 CH) 

Yangzijiang Shipbuilding (YZJSGD SP) 

Cssc Offshore &amp; Marine Engg Group (317 HK) 


The average P/B multiple of these five valuation peers come at 1.12x based on their 1Q21 financials.












As of FY2021 1Q
Note
DSME
China Shipbuilding Industry Company Ltd
China CSSC Holdings Ltd
Yangzijiang Shipbuilding Holdings Ltd
CSSC Offshore and Marine Engineering Group Co Ltd


Equity
A
₩3,635.6B
₩15,324.2B
₩9,411.0B
₩6,066.1B
₩3,057.2B


Non-controlling interest
B
₩0.0B
₩157.6B
₩1,247.5B
₩186.1B
₩550.6B


Applied equity
C=A-B
₩3,635.6B
₩15,166.6B
₩8,163.6B
₩5,880.1B
₩2,506.5B


Reference market cap
D
₩3,401.1B
₩15,590.9B
₩11,966.7B
₩4,552.5B
₩3,504.3B


PBR
E=D÷C
0.94x
1.03x
1.47x
0.77x
1.40x


Average PBR
-
1.12x

Source: DART


The averaged P/B multiple of 1.12x was applied to HHI's equity of ₩5,035.7B from the second quarter of this year. Then, an IPO flow of ₩936.0B (at the lower end of the indicative price band) was added. As a result, we have a reference market cap of ₩6.58T, giving a price per share of ₩74,094.








HHI: P/B valuation

Average PBR
A
1.12x


Applied equity
B
₩5,035.7B


IPO inflow
C
₩936.0B


Reference market cap
D=(AxB)+C
₩6,577.6B


Post-IPO SO
E
88,773,116


Price per share
F=D÷E
₩74,094

Source: DART


The indicative price band lies between ₩52,000 and ₩60,000. This is obtained by applying a discount rate of19.02% to 29.82% to the market cap of ₩6.58T calculated through PBR. This much discount gives a P/B multiple of 0.77x to 0.89x.








Pricing
Low
High


Price
₩52,000
₩60,000


Base deal size
₩936.0B
₩1,080.0B


- Institutional allotment (55%)
₩514.8B
₩594.0B


Implied market cap
₩4,616.2B
₩5,326.4B


- Discount
29.82%
19.02%


Implied PBR
0.77x
0.89x

Source: DART





Hyundai Heavy Industries IPO: Offering Details & Valuation Issues

South Korea

HD Korea Shipbuilding & Offshore Engineering Co., Ltd. operates as a shipbuilding and offshore company. The Company provides industrial plant engineering, special and naval shipbuilding, marine engine and machinery, industrial machinery and energy services. HD Korea Shipbuilding & Offshore Engineering markets its products worldwide.

HD Korea Shipbuilding & Offshore Engineering (009540 KS)

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
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HD Korea Shipbuilding & Offshore Engineering (009540 KS)

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52-week Range

Market Cap (USDm)

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