In today’s briefing:
- HD Hyundai Marine Solutions IPO: Valuation Insights
- What’s Additionally Being Heard on Hanwha’s Austal Deal from Korea’s Local Scene
- Austal (ASB AU): Hanwha’s NBIO Is A Non-Starter
- China Comm Const (1800 HK): A Nice Surprise
HD Hyundai Marine Solutions IPO: Valuation Insights
- HD Hyundai Marine Solution (443060 KS), the ship after-service subsidiary of HD Hyundai (267250 KS), aims to raise up to US$550 million.
- We previously discussed the IPO in HD Hyundai Marine Solutions IPO: The Investment Case.
- We examine the syndicate’s valuation methodology. Our analysis suggests that the HMS is, at best, fairly valued at the IPO price range. We would pass on the IPO.
What’s Additionally Being Heard on Hanwha’s Austal Deal from Korea’s Local Scene
- Hanwha received counsel indicating foreign regulators won’t oppose Austal’s acquisition. They admit it’s restricted to AUKUS countries but argue Korea’s ties ease opposition.
- Hence, Hanwha Ocean is dropping some heavy hints that even though Austal has turned down the acquisition offer for now, there’s still a chance the deal could go through.
- The pivotal factor lies in whether Hanwha Ocean can secure approval from the AUKUS countries. Should they succeed, it is anticipated that Austal would be inclined to accept the deal.
Austal (ASB AU): Hanwha’s NBIO Is A Non-Starter
- Perth-Based shipbuilder Austal Ltd (ASB AU) has confirmed a A$2.825/share non-binding indicative proposal, by way of a Scheme, from Hanwha Ocean (042660 KS). That’s a 28.4% premium to last close.
- Austal designs and builds defence vessels for the Australian and US navies. Austal believes Hanwha is unlikely to secure necessary approvals from the Australian and US governments.
- Hanwha considers this view to be baseless, that it is a credible buyer, and its capabilities and investment are aligned with government objectives in Australia, the US and South Korea.
China Comm Const (1800 HK): A Nice Surprise
- China Communications Construction (1800 HK) believes its FY24 new contracts and revenue growth can be faster than FY23, particularly fuelled by strategic new industries and overseas.
- Its end-FY23 contract backlog of Rmb3.45trn (+1.8% YoY) translates into coverage of 4.1x of FY24F revenue, providing a secured stream of revenue over the next few years.
- Its improving cash flow allows for a 1pp increase in the payout ratio. Efforts in realising underlying asset value should narrow its 82% discount to book value.
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