Dark Fleet Oil Tanker ‘Ceres 1’ Involved in Collision Heads to China
(Bloomberg) — A dark-fleet oil tanker that was recently involved in a crash in Southeast Asia is now on its way to China. Ceres I, an aging very-large crude carrier...
(Bloomberg) —
A company that repairs and manages ships kicked off what’s poised to be South Korea’s biggest initial public offering in two years, with analysts citing strong revenue growth a key attraction.
HD Hyundai Marine Solution Co. and holder KKR & Co. are seeking to raise as much as 742 billion won ($548 million) through a share sale, with market capitalization expected to reach up to 3.7 trillion won after the IPO. The listing will potentially be the country’s biggest since battery giant LG Energy Solution Ltd. in 2022.
The company is expected to see a “sharp growth” in profit every year as shipping firms seek to adapt their fleets and become more environmentally-friendly, said Choi Gwang-Shik, an analyst at Daol Investment & Securities Co. Choi initiated coverage on the stock with a buy rating and a price target that’s about 73% higher than the top-end of the offered range.
Cargo lines are racing to overhaul their vessels to meet demands from major customers to reduce emissions, paving the way for steady orders for the company. Hyundai Marine may also benefit from its relationship with HD Hyundai Heavy Industries Co., the world’s largest shipbuilder, from which it was spun off in 2016.
Hyundai Marine provides technical support, parts supply and warranty services throughout a ship’s life cycle. It will use the 370 billion won from the share of its proceeds to build more warehouses around the world to store components for retrofit works.
It kicked off its bookbuilding exercise on Monday and will go on till April 22. The company expects to list on May 9.
KKR will retain a 24.2% stake in the firm after the listing. The shareholder will be able to sell more shares six months later.
While prospects remained strong, some IPO funds see Hyundai Marine’s potential market value of close to 4 trillion won as excessive. Comparisons made in the company’s prospectus to global firms such as Sweden’s Alfa Laval AB and Norway’s Kongsberg Gruppen ASA may not be appropriate as “Hyundai Marine Solution is only the ship after-service specialist subsidiary of HD Hyundai,” Sanghyun Park, an analyst at Clepsydra Capital, wrote in a note published on Smartkarma platform on March 28.
The companies selected as comparable peers in the IPO prospectus were based on comprehensive analysis of their finance and business, a representative to Hyundai Marine said in a response to questions from Bloomberg.
They were picked based on sales generated that were larger than $1 billion during the latest fiscal year and had stable cash flow through the provision of repair and retrofitting services, among other things, the company said.
But not everyone is convinced. The valuation methodology “is flawed,” said Arun George, an analyst at Global Equity Research Ltd., who intends to give the IPO a pass.
© 2024 Bloomberg L.P.
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