HHI proves popular as retail investors get their chance

HHI_Credit_Bloomberg

The two-day public subscription period for Hyundai Heavy Industries’ (HHI) initial public offering (IPO) began Tuesday with the company attracting over 5.5 trillion won ($4.7 billion) in deposits on the first day.

Of recent IPOs, game developer Krafton attracted around 5 trillion won during its two-day public subscription period, while KakaoBank attracted over 58 trillion won. Analysts are expecting investors to more aggressively jump in on the second day.

While the deposited amount is not a good indication of the future performance of the company’s shares, some Korean investors use it as a rough measure of sentiment.

Each share is priced at 60,000 won. The price was set at the upper end of the price band offered by the company, which was between 52,000 won and 60,000 won.

The company is offering 18 million shares newly issued for the IPO. Of that, 25 percent have been allocated to retail investors.

The shipbuilder is planning to raise 1.08 trillion won with the IPO and use some 70 percent of raised funds on research and development of next-generation ships and environmentally-friendly shipbuilding technologies.

The shares were popular among institutional investors.

On Monday the shipbuilder announced in a release that its shares were oversubscribed 1,836 times during its two-day bookbuilding period last week, with 1,633 institutional investors at home and abroad taking part. The competition during the bookbuildling process is the second highest recorded, after the 1,883 times oversubscription record set by SK IE Technology.

Analysts are expecting the shipbuilder to show robust growth after listing, as the shipbuilding market is recovering led by demand to replace old and polluting ships with more eco-friendly models to abide by international guidelines on ship emissions.

“The company has sweeping dominance in market share when it comes to building high value-added ships like liquefied natural gas-powered ships,” wrote Choi Jin-myung, an analyst from NH Investment & Securities, in a report early this month. “Orders in the shipbuilding market are also expected to improve for the next five years.”

HHI will be listing on the Kospi on Sept. 17, according to the company’s regulatory filing on Monday.

This won’t be the first time the company has been listed on the local stock market. Until 2019, HHI was traded on the Kospi. In 2019, it changed its name to Korea Shipbuilding & Offshore Engineering (KSOE) and split into an operating company, which took the name HHI, and an intermediate holding company, KSOE.

Those decisions were part of the acquisition of Daewoo Shipbuilding & Marine Engineering. The acquisition still needs approval from overseas antitrust regulators to be completed.

Since then KSOE has been traded on the stock market, with HHI becoming a wholly-owned subsidiary of KSOE.

Last year, HHI posted a net loss of 431.4 billion won. In the first half of this year, its net loss was 345.5 billion won.

Source: Korean JoongAng Daily

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