Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Nearly 30 years of experience in the Korean/Asian equity research. Major sectors coverage include the following:
- Technology 
- Consumer 
- Special Situations/Deep Value Plays
- Tender Offers/M&As
- Holdcos/Stubs
- Asian Unicorns/Private Companies

Korea/Asia, Events, IPOs

Hyundai Energy Solutions IPO Valuation Analysis

Equity Capital Markets

Hyundai Energy Solutions / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/hyundai-energy-solutions" target="_blank" data-smartkarma-citation="entities:28345:1" rel="noopener">Hyundai Energy Solutions (322000 KS)</a> is getting ready to complete its IPO in November. The IPO price range is from 24,000 won to 28,000 won. The IPO base deal size is from $80 million to $94 million. The book-building for the institutional investors starts on November 4th.</li>
<li>The company's geographical sales breakdown is one of the key concerns of the company. This is mainly because its sales declined so much (down 62% YoY) in the United States in 2018. Most of the company's growth in the past two years has been led by the much higher sales growth in Korea. The incumbent Moon Jae-In administration has been big proponents of alternative energy, especially solar power in Korea. The potential change in the control of the National Assembly in Korea in April 2020 remains a major risk for the entire Korean solar-related companies, especially Hyundai Energy Solutions since more than 70% of its revenues are generated in Korea. </li>
<li>The panel prices for domestic declined by 46% from 694 won per WP in 2016 to 377 won per WP in 1H19. The continued decline of the solar PV panel prices remains one of the biggest risks for the company as the industry still suffers from an extreme amount of price competition, especially from the Chinese PV panel producers. </li>
<li>One of the negative factors of this IPO is that the solar/alternative energy-related stocks have been relatively weak in Korea this year. For example, <a href="https://www.smartkarma.com/entities/oci-co-ltd" target="_blank" data-smartkarma-citation="entities:1904:1" rel="noopener">Oci Co Ltd (010060 KS) </a>which is a global leader in producing polysilicon for the solar panels, experienced a 35% drop in its share price YTD.</li>
</ul>



Hyundai Energy Solutions (322000 KS) is getting ready to complete its IPO in November. The IPO price range is from 24,000 won to 28,000 won. The IPO base deal size is from $80 million to $94 million. The book-building for the institutional investors starts on November 4th.
The company's geographical sales breakdown is one of the key concerns of the company. This is mainly because its sales declined so much (down 62% YoY) in the United States in 2018. Most of the company's growth in the past two years has been led by the much higher sales growth in Korea. The incumbent Moon Jae-In administration has been big proponents of alternative energy, especially solar power in Korea. The potential change in the control of the National Assembly in Korea in April 2020 remains a major risk for the entire Korean solar-related companies, especially Hyundai Energy Solutions since more than 70% of its revenues are generated in Korea. 
The panel prices for domestic declined by 46% from 694 won per WP in 2016 to 377 won per WP in 1H19. The continued decline of the solar PV panel prices remains one of the biggest risks for the company as the industry still suffers from an extreme amount of price competition, especially from the Chinese PV panel producers. 
One of the negative factors of this IPO is that the solar/alternative energy-related stocks have been relatively weak in Korea this year. For example, Oci Co Ltd (010060 KS) which is a global leader in producing polysilicon for the solar panels, experienced a 35% drop in its share price YTD.


Hyundai Energy Solutions

Hyundai Energy Solutions IPO Preview