Daily Brief South Korea: PhilEnergy, Hana Financial, Sambu Construction and more

In today’s briefing:

PhilEnergy IPO Valuation Analysis
South Korea Banks Screen; Focus on Hana Financial (086790 KS) & Industrial Bank of Korea (024110 KS)
Sambu Construction: Likely to Be Included in Ukraine Reconstruction Projects

PhilEnergy IPO Valuation Analysis

Our base case valuation of PhilEnergy is target price of 41,545 won per share, which represents 38% higher than the high end of the IPO price range of 30,000 won.
We believe a premium valuation multiple to the comps (20%) is appropriate due to PhilEnergy’s higher sales growth rate and higher ROE than the comps in 2021 to 2023.
We estimate the company to generate sales of 312.5 billion won in 2023 (up 64.7% YoY) and 361.5 billion won (up 15.7% YoY) in 2024.

In our latest South Korean banks screener; we stick with quality play Hana Financial and deep value Industrial Bank of Korea, despite rising credit quality headwinds
We introduce delinquency ratio charts that show that NPLs and other poor quality credits are on a rising trend, yet most banks have healthy NPL provisions coverage
Hana has a low PBV ratio relative to its premium ROE and an undemanding PEG; Industrial Bank of Korea has attractive multiples, PEG ratio and near top returns versus peers

On 22 May, it was announced that Sambu Construction was invited to the Ukraine Global Reconstruction Forum held in Warsaw and Krakow, Poland from 22 to 25 May.
Sambu Construction is likely to be one of the Korean construction companies to be involved in the Ukraine reconstruction projects.
The total cost of reconstruction of Ukraine has been estimated from about $0.4 trillion to $1.1 trillion.

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