Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>
<strong><a href="https://www.smartkarma.com/entities/jd-com-inc" target="_blank" data-smartkarma-citation="entities:29043:1" rel="noopener">JD.com (9618 HK)</a></strong>'s CCASS movements are a thing, and there are things going on in the background, but the things in the foreground are not as menacing as they appear. </li>
<li>
<strong><a href="https://www.smartkarma.com/entities/suzuki-motor-corp" target="_blank" data-smartkarma-citation="entities:732" rel="noopener">Suzuki Motor (7269 JP)</a></strong>'s NAV discount and implied stub plumb new lows. Again.</li>
<li>Musk has made a non-binding proposal for <strong><a href="https://www.smartkarma.com/entities/twitter-inc" target="_blank" data-smartkarma-citation="entities:667" rel="noopener">Twitter Inc (TWTR US)</a> </strong>at US$54.20/share. Get it? Get it? Nudge nudge wink wink. That's all part of the fun for him.</li>
</ul>



JD.com (9618 HK)'s CCASS movements are a thing, and there are things going on in the background, but the things in the foreground are not as menacing as they appear. 

Suzuki Motor (7269 JP)'s NAV discount and implied stub plumb new lows. Again.
Musk has made a non-binding proposal for Twitter Inc (TWTR US) at US$54.20/share. Get it? Get it? Nudge nudge wink wink. That's all part of the fun for him.


Last Week in Event SPACE: JD.com, Suzuki, Twitter, Toyo Construction, Uniti Group, Singapore Press

<ul>
<li>#2 shareholder and erstwhile activist 3D Investment Partners writes a letter to <strong><a href="https://www.smartkarma.com/entities/toshiba-corp" target="_blank" data-smartkarma-citation="entities:637:1" rel="noopener">Toshiba Corp (6502 JP)</a></strong>'s Board demanding 3 measures before the AGM. </li>
<li>
<strong><a href="https://www.smartkarma.com/entities/pendal-group-ltd" target="_blank" data-smartkarma-citation="entities:15795:1" rel="noopener">Pendal Group (PDL AU)</a></strong> is assessing Perpetual's cash/scrip Offer provides an indicative price of $6.23/share; however, the wording in the announcement suggests the bid is opportunistic and will be rejected. </li>
<li>Because of rising regulatory requirements for NBFCs, a <strong><a href="https://www.smartkarma.com/entities/hdfc-bank-ltd-4b6b7a92-9087-468d-9dbe-ab169e77f014" target="_blank" data-smartkarma-citation="entities:558:1" rel="noopener">HDFC Bank (HDFCB IN)</a></strong> /<strong><a href="https://www.smartkarma.com/entities/housing-development-finance" target="_blank" data-smartkarma-citation="entities:252:1" rel="noopener">HDFC Limited (HDFC IN)</a></strong> was to be expected at some point.</li>
</ul>


#2 shareholder and erstwhile activist 3D Investment Partners writes a letter to Toshiba Corp (6502 JP)'s Board demanding 3 measures before the AGM. 

Pendal Group (PDL AU) is assessing Perpetual's cash/scrip Offer provides an indicative price of $6.23/share; however, the wording in the announcement suggests the bid is opportunistic and will be rejected. 
Because of rising regulatory requirements for NBFCs, a HDFC Bank (HDFCB IN) /HDFC Limited (HDFC IN) was to be expected at some point.


Last Week in Event SPACE: Toshiba, Pendal, HDFC Bank, YZJ Shipbuilding, BHP, Virtus

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

<ul>
<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> aims to spin off Yangzijiang Financial Holdings (YZJFH) through a dividend-in-specie of all the issued YZJFH shares to shareholders on a one-on-one basis.</li>
<li>YZJFH shares will be listed on the SGX-ST by way of an introduction. The EGM to approve the spin-off will be held on 18 April at 4 pm.</li>
<li>This transaction will unlock value. Our SoTP valuation is S$1.94 per share, which is a 22% upside to the last close price of S$1.59 per share.</li>
</ul>



Yangzijiang Shipbuilding (YZJSGD SP) aims to spin off Yangzijiang Financial Holdings (YZJFH) through a dividend-in-specie of all the issued YZJFH shares to shareholders on a one-on-one basis.
YZJFH shares will be listed on the SGX-ST by way of an introduction. The EGM to approve the spin-off will be held on 18 April at 4 pm.
This transaction will unlock value. Our SoTP valuation is S$1.94 per share, which is a 22% upside to the last close price of S$1.59 per share.


Yangzijiang: Proposed Spin-Off of YZJFH to Unlock Value

Equity Bottom-Up

Yangzijiang Shipbuilding / Equity Bottom-Up

<ul>
<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> has <a href="https://links.sgx.com/FileOpen/YZJ_Announcement_final.ashx?App=Announcement&amp;FileID=692475" target="_blank" rel="noopener">proposed</a> a spin-off and listing of the company's investment segment.</li>
<li>Currently, its principal activities under the investment segment consist of microfinancing, debt investments at amortised cost, and other investments. The proposed spin-off and listing <em>may</em> be completed in 6-12 months.</li>
<li>As of 1 November 2021, Yangzijiang 's secured orders are the largest in its history. </li>
</ul>



Yangzijiang Shipbuilding (YZJSGD SP) has proposed a spin-off and listing of the company's investment segment.
Currently, its principal activities under the investment segment consist of microfinancing, debt investments at amortised cost, and other investments. The proposed spin-off and listing may be completed in 6-12 months.
As of 1 November 2021, Yangzijiang 's secured orders are the largest in its history. 


Yangzijiang Shipbuilding (YZJSGD SP): Investment Ops Spin-Off

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.

Equity Capital Markets

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">
<colgroup>
<col width="100">
<col width="100">
</colgroup>
<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">
<colgroup>
<col width="100">
<col width="100">
</colgroup>
<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">
<colgroup>
<col width="100">
<col width="100">
</colgroup>
<tbody>
<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">
<colgroup>
<col width="100">
<col width="100">
<col width="100">
<col width="100">
<col width="100">
<col width="100">
<col width="100">
</colgroup>
<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>
<table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
<col width="100">
</colgroup>
<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

Singapore

Seatrium Ltd offers engineering solutions for the offshore, marine, and energy industries. The Company provides rigs and floaters, repairs and upgrades, offshore platforms, and specialized shipbuilding. Seatrium serves customers worldwide.

Frencken Group Limited designs, develops, and produces complex and advanced modules and systems, based on precision mechanics, hardware and software.

Hong Leong Asia Limited manufactures and fabricates precast concrete products, trades and distributes steel and cement products,  The Company also manufactures and distributes refrigerators and freezers, assembles air-conditioners and diesel engines as well as manufactures and sells metal drums and containers, plastic packaging related products, and container components.

China Yuchai International Limited is a holding company.  Through its subsidiary, Guangxi Yuchai Machinery Company Limited (Yuchai), manufactures, assembles, and sells diesel engines in China.

China Yuchai International Limited (CYD US)

COSCO SHIPPING International (Singapore) Co., Ltd. provides ship building and repairing and marine engineering services. The Company offers bulk, liquefied natural gas, and special purpose carriers, as well as oil tankers. COSCO SHIPPING International serves customers worldwide.

COSCO SHIPPING International (Singapore) (COS SP)

Keppel Corporation Limited's core businesses are offshore and marine, infrastructure, property investment and development, telecommunications and transportation, energy, and engineering.

Sembcorp Industries Ltd provides utilities and integrated services for industrial sites such as power, gas, steam, water, wastewater treatment and other on-site services. The Company's businesses also include marine & offshore engineering and urban development comprising industrial parks and business, commercial and residential spaces.

InnoTek Ltd., through its subsidiaries, manufactures metal components.  The Company offers metal stamping, commercial tool and die fabrications, sub-assembly work and frame manufacturing.  InnoTek primarily serves customers in Japan and Europe.

World Precision Machinery Limited manufactures and supplies stamping machines and related metal components. The Company's other products include bending, cutting and CNC punching machines.

ST Engineering is a global technology, defence and engineering group with offices across Asia, Europe, the Middle East and the U.S., serving customers in more than 100 countries. The Group uses technology and innovation to solve real-world problems and improve lives through its diverse portfolio of businesses across the aerospace, smart city, defence and public security segments. Headquartered in Singapore, ST Engineering reported revenue of $7.9b in FY2019 and it ranks among the largest companies listed on the Singapore Exchange. It is a component stock of the FTSE Straits Times Index, MSCI Singapore, iEdge SG ESG Transparency Index and iEdge SG ESG Leaders Index.

Samsung Heavy Industries Co., Ltd. manufactures crude oil tankers, container vessels, bulk carriers, cruisers, and passenger ferries.  The Company also produces steel and bridge structures, and material handling equipment.  In addition, Samsung Heavy Industries provides civil engineering, architectural, and plant construction services.

Donaldson Company, Inc. manufactures filtration systems and replacement parts. The Company's products include filters and emission control products for heavy duty mobile equipment, in-plant air cleaning systems, air intake systems for industrial gas turbines, and specialized filters for computer disk drives, aircraft cabins, and semiconductors. Donaldson operates around the world.

AGCO Corporation manufactures and distributes agricultural equipment throughout the world.  The Company sells a range of agricultural equipment and related replacement parts, including tractors, combines, hay tools, sprayers, and forage equipment.  AGCO markets its products under a variety of brand names, including Massey Ferguson, AGCO, Tye, GLEANER, and Hesston.

Kurita Water Industries Ltd. manufactures, sells, and maintains water treatment equipment and systems.  The Company's products include water purification and waste water treatment equipment as well as soil remediation systems.  Kurita also manufactures and sells chemicals for water treatment related to sanitation, air-conditioning, and construction.

Thermax Ltd manufactures equipment and machinery used to both produce and to conserve energy. The Company operates through a number of divisions, including Boilers, Heat Recovery Steam Generators, Water Treatment Plants and Air Pollution Control Equipment. In addition, Thermax  produces steam and gas turbines and diesel gensets through a number of strategic alliances.

EBARA CORPORATION manufactures pneumatic and hydraulic pumps and related equipment.  The Company's products include fuel, oil, water, and firefighting pumps, as well as steam turbines and boilers.  Ebara Corporation also engineers garbage incinerators, smoke desulfurizers, and other products related to environmental technology.

IHI Corporation manufactures heavy machinery. The Company produces aircraft jet engines, rocket propulsion systems, and ships for military and commercial use. Ishikawajima-Harima also constructs petroleum refineries and nuclear power plants.

Watts Water Technologies, Inc. designs, manufactures, and sells a line of products to the water regulation and control markets.  The Company has manufacturing plants and distribution channels in the United States, Canada, and Europe, as well as a joint venture in The People's Republic of China.

Chart Industries, Inc. is a global manufacturer of equipment used in the production, storage, and end-use of hydrocarbon and industrial gases. The Company's products include vacuum-insulated containment vessels, heat exchangers, cold boxes, and other cryogenic components.

RBC Bearings Incorporated designs, manufactures, and markets bearing products. The Company offers precision plain, roller, cam followers, couplings, collars, locking, tool holders, shafts, pins, rods, tubes, and ball bearings. RBC Bearings serves industrial, aerospace, and defense markets worldwide.

Yangzijiang Shipbuilding (Holdings) Limited builds a wide range of ships. The Company produces a wide range of commercial vessels, mini bulk carriers, multi-purpose cargo vessels, containerships, chemical tankers, offshore supply vessels, rescue and salvage vessels, and lifting vessels.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Yangzijiang Shipbuilding (YZJSGD SP)

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