Hot IPOs Despite Volatile Market... KOSPI's 'Hyundai ENG' and KOSDAQ's 'SM Sangseon' Launched

[Asia Economy Reporter Lee Seon-ae] While the domestic stock market continues a tedious phase of adjustment and sideways movement, causing frustration among investors with its ‘rough market conditions,’ the initial public offering (IPO) market is maintaining unprecedented enthusiasm. The IPO market, which is setting record highs, is expected to sustain this momentum through the second half of the year and into next year. In the second half, ‘SM Sangseon’ will enter the KOSDAQ market, and next year, the first ‘trillion-won class’ major IPO will appear early on the KOSPI market. The protagonist is Hyundai Engineering.

◆ Next Year’s First Major IPO Hyundai ENG = According to the Korea Exchange on the 1st, Hyundai Engineering submitted a preliminary listing review application to the KOSPI Market Division the day before. The lead underwriters are Mirae Asset Securities, KB Securities, and Goldman Sachs. Hyundai Engineering is a subsidiary of Hyundai Construction, responsible for plant, infrastructure, and construction businesses within the Hyundai Motor Group. Hyundai Construction, the largest shareholder, holds 38.62% of the shares. Other major shareholders include Hyundai Motor Group Chairman Chung Eui-sun (11.72%), Hyundai Glovis (11.67%), Kia Motors (9.35%), and Hyundai Mobis (9.35%).

In the first half of this year, Hyundai Engineering recorded consolidated sales of 3.5795 trillion KRW and operating profit of 210.3 billion KRW. Last year, it posted sales of 7.1884 trillion KRW and operating profit of 258.7 billion KRW. Operating profit has significantly improved this year, leading to optimistic forecasts that Hyundai Engineering’s market capitalization could reach up to 10 trillion KRW after listing.

Kim Se-ryeon, a researcher at eBest Investment & Securities, said, "A corporate value of 10 trillion KRW for Hyundai Engineering is not an excessive level," adding that applying a 20% premium for Chairman Chung Eui-sun’s shareholding is sufficient. Assuming net cash of 2.5 trillion KRW at the time of listing and valuing net asset value (NAV) based on 2022 EBITDA, applying a multiple (EV/EBITDA) of 10 times results in a NAV of 9 trillion KRW. As of the 29th of last month, Hyundai Engineering’s unlisted shares traded at 1,345,000 KRW per share on the over-the-counter trading platform ‘Securities Plus Unlisted.’ Considering the number of issued shares (7,595,341 shares), the over-the-counter market valuation has already exceeded 10 trillion KRW.

Once the listing review is completed, it is expected that the securities registration statement will be submitted to the Financial Supervisory Service in November, with a likely debut on the KOSPI market in January or February next year.

◆ SM Sangseon’s KOSDAQ Debut ‘This Year’s Largest IPO Record’ = SM Sangseon, a national deep-sea container shipping company under the Samra Midas (SM) Group, will debut on the KOSDAQ market within this year. SM Sangseon submitted its preliminary listing review application to the KOSDAQ Market Division on July 12 and received approval for the preliminary review the day before. The lead underwriter is NH Investment & Securities. Backed by its best-ever performance this year, the company’s valuation is estimated at 2.5 trillion KRW. SM Sangseon plans to issue 79,633,458 shares, of which 23,890,036 shares will be raised through the public offering. The largest shareholder is Samra Midas with a 41.4% stake, and TK Chemical, a listed company, holds 29.55%.

There remains curiosity as to whether LG Energy Solution will close out this year’s IPO market or debut in the first quarter of next year. LG Energy Solution is a mega IPO expected to raise 10 trillion KRW with a corporate value of 100 trillion KRW. Its listing schedule has been delayed due to GM’s battery recall incident.

The domestic IPO market is heating up as large-scale companies raising trillion-won level funds and future-oriented new industry companies enter the stock market evenly. According to the Korea Exchange, 25 companies were listed in the third quarter alone, bringing the total number of newly listed companies this year to 65. This is a 41% increase compared to the cumulative 46 companies listed by the third quarter last year. The cumulative public offering amount through the third quarter reached approximately 17.2 trillion KRW, more than three times last year’s total public offering amount of about 4.7 trillion KRW. The subscription competition rate is also at an all-time high. There were 33 companies with subscription competition rates exceeding 1000 to 1, and among them, 12 companies surpassed 2000 to 1 by a wide margin.

IR specialist company IR Q-Dus predicted, "With many large companies and promising small and medium-sized enterprises related to the 4th industrial revolution, this year’s IPO market will record an all-time high in public offering scale."

This content was produced with the assistance of AI translation services.