Asia Pac ECM and Index Rebal, Shenton Research

Ke Yan, CFA, FRM

Asia Pac ECM and Index Rebal

Asia Pac IPO & Placement Research, China Biotech

DZT Research

DZT Research is an independent Asia Pacific equity specialist. Our quantitative research covers index rebalancing flows, alongside exchange data analytics accross Asia Pacific. On the equity capital markets side, we focus on Asia Pacific ECM, especially biotech and TMT. Our lead analyst is frequently cited by international media.

Quantitative Analysis

<ul>
<li>We analyze the weekly Shanghai/Shenzhen northbound Connect flows with our data engine for holding position as of March 10th.</li>
<li>We estimate the weekly outflows to be US$1,487.9 million, led by financials, materials, and offset by industrials, health care, utilities.</li>
<li>We highlight flows for China Tourism Group Duty Free, Kweichow Moutai, Byd, China Merchants Bank, Inner Mongolia Yili Industrial, Longi Green Energy Technology, Tongwei, Luxshare Precision Industry.</li>
</ul>


We analyze the weekly Shanghai/Shenzhen northbound Connect flows with our data engine for holding position as of March 10th.
We estimate the weekly outflows to be US$1,487.9 million, led by financials, materials, and offset by industrials, health care, utilities.
We highlight flows for China Tourism Group Duty Free, Kweichow Moutai, Byd, China Merchants Bank, Inner Mongolia Yili Industrial, Longi Green Energy Technology, Tongwei, Luxshare Precision Industry.


Northbound Flows (Mar 10th): CTG, Moutai, Byd, CMB, Yili, Longi Green Energy, Tongwei, Luxshare

<ul>
<li>We analyze the weekly Shanghai/Shenzhen northbound Connect flows with our data engine for holding position as of September 30th.</li>
<li>We estimate the weekly inflows to be US$994.7 million, led by consumer staples, health care, materials sectors, and offset by financials, industrials.</li>
<li>We highlight flows for Moutai, Wuliangye, Qinghai Salt Lake, Longi Green, CMB, TCL Zhonghuan, Sungrow.</li>
</ul>


We analyze the weekly Shanghai/Shenzhen northbound Connect flows with our data engine for holding position as of September 30th.
We estimate the weekly inflows to be US$994.7 million, led by consumer staples, health care, materials sectors, and offset by financials, industrials.
We highlight flows for Moutai, Wuliangye, Qinghai Salt Lake, Longi Green, CMB, TCL Zhonghuan, Sungrow.


Northbound Flows (Sep 30th): Moutai, Wuliangye, Qinghai Salt Lake

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<ul>
<li>The terms for the proposed combination of Keppel O&amp;M and <a href="https://www.smartkarma.com/entities/sembcorp-marine-ltd" target="_blank" data-smartkarma-citation="entities:11:1" rel="noopener">Sembcorp Marine (SMM SP)</a> were announced. The agreed equity value exchange ratio between Keppel O&amp;M and Sembcorp Marine is 56%:44%. </li>
<li>The proposed combination will require <a href="https://www.smartkarma.com/entities/keppel-corp-ltd" target="_blank" data-smartkarma-citation="entities:12:1" rel="noopener">Keppel Corp (KEP SP)</a> and Sembcorp Marine shareholder approvals at separate EGMs and is expected to close in 4Q2022.</li>
<li>The transaction is a big win for Keppel shareholders as the proposed combination creates S$9.4 billion of value, which is around 80% of Keppel’s market cap at the last close.</li>
</ul>


The terms for the proposed combination of Keppel O&amp;M and Sembcorp Marine (SMM SP) were announced. The agreed equity value exchange ratio between Keppel O&amp;M and Sembcorp Marine is 56%:44%. 
The proposed combination will require Keppel Corp (KEP SP) and Sembcorp Marine shareholder approvals at separate EGMs and is expected to close in 4Q2022.
The transaction is a big win for Keppel shareholders as the proposed combination creates S$9.4 billion of value, which is around 80% of Keppel’s market cap at the last close.


Keppel: A Massive Winner from Keppel O&M and Sembcorp Marine’s Combination

<ul>
<li>
<a href="https://www.smartkarma.com/entities/yangzijiang-shipbuilding-holdings-limited" target="_blank" data-smartkarma-citation="entities:660:1" rel="noopener">Yangzijiang Shipbuilding (YZJSGD SP)</a> aims to spin off Yangzijiang Financial Holdings (YZJFH) through a dividend-in-specie of all the issued YZJFH shares to shareholders on a one-on-one basis.</li>
<li>YZJFH shares will be listed on the SGX-ST by way of an introduction. The EGM to approve the spin-off will be held on 18 April at 4 pm.</li>
<li>This transaction will unlock value. Our SoTP valuation is S$1.94 per share, which is a 22% upside to the last close price of S$1.59 per share.</li>
</ul>



Yangzijiang Shipbuilding (YZJSGD SP) aims to spin off Yangzijiang Financial Holdings (YZJFH) through a dividend-in-specie of all the issued YZJFH shares to shareholders on a one-on-one basis.
YZJFH shares will be listed on the SGX-ST by way of an introduction. The EGM to approve the spin-off will be held on 18 April at 4 pm.
This transaction will unlock value. Our SoTP valuation is S$1.94 per share, which is a 22% upside to the last close price of S$1.59 per share.


Yangzijiang: Proposed Spin-Off of YZJFH to Unlock Value

Korea / Special Situations, Clepsydra Capital

Sanghyun Park

Korea / Special Situations

Korea / Special Sits, Pairs, Index Rebalancing

Clepsydra Capital

Investigate special situations, pairs, and index rebalancing trades in Korea.

Equity Capital Markets

HD Korea Shipbuilding & Offshore Engineering / Equity Capital Markets

HD Korea Shipbuilding & Offshore Engineering (009540 KS)

HD Korea Shipbuilding & Offshore Engineering

<div><div><h2>Offering size</h2></div></div><div><p>Hyundai Heavy Industries (HHI) offers 18M shares, which account for 25.43% of the pre-IPO total shares, of which 55-75% are allocated to institutions. It will be listed on KOSPI.</p></div><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Offering size"}'>Offering size</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Ticker"}'>Ticker</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"329180"}' data-sheets-numberformat='{"1":2,"2":"[$₩-412]#,##0","3":1}' data-sheets-formula="=R[1]C[-2]">329180</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Bourse"}'>Bourse</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"KOSPI"}'>KOSPI</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Offering"}'><strong>Offering</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":8654230}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'><strong>18,000,000</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"- % of SO"}'><strong>- % of pre-IPO SO</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.25433386315786916}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=Terms!R[5]C[-2]"><strong>25.43%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"- Institutional allotment"}'><strong>- Institutional allotment</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"55.00~75.00%"}' data-sheets-formula="=Terms!R[5]C[-2]"><strong>55.00~75.00%</strong></td>
</tr>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table><div class="content-highlight">
<p><strong>Who is HHI?</strong></p>
<ul>
<li>HHI is the world's largest shipbuilding company based in Korea. Since its establishment in 1973, it has maintained the No. 1 position in the global shipbuilding market since 1983.</li>
<li>Prior to the establishment of the holding company in 2017, Hyundai Heavy Industries was at the apex of a circular shareholding structure that led to Chung Mong-jun (owner) → Hyundai Heavy Industries → Hyundai Samho Heavy Industries → Hyundai Mipo Dockyard → Hyundai Heavy Industries.</li>
<li>In June 2019, Hyundai Heavy Industries conducted a physical division to take over Daewoo Shipbuilding &amp; Marine Engineering. It was divided into an intermediate holding company, Korea Shipbuilding &amp; Offshore Engineering (KSOE), and an operating company, Hyundai Heavy Industries. For this reason, KSOE currently owns 100% of HHI.</li>
</ul>
</div><div><div><h2>Split</h2></div></div><div>
<p>This IPO is a 100% primary offering. As a result, this offering will see a capital increase rate of 25.43% with a shareholding dilution of 20.28%. This event is free of any additional options: cornerstone, clawback, or greenshoe.</p>
<table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Split"}'>Split</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Primary %"}'><strong>Primary %</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=Terms!R[3]C[-2]"><strong>100.00%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Secondary %"}'>Secondary %</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=Terms!R[4]C[-2]">0.00%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Capital increase rate"}'><strong>Capital increase rate</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.25433386315786916}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=Terms!R[4]C[-2]"><strong>25.43%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Dilution"}'>Dilution</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.20276408907399399}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=Terms!R[4]C[-2]">20.28%</td>
</tr>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table>
</div><div><div></div></div><div>
<div><div><h2>Schedule</h2></div></div>
<div>
<p>The book opens on August 26 (September 2 for local institutions) and runs until September 3. The allotment will be on September 6, finalizing an offering price. The subscription falls on September 7.</p>
<table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Schedule"}'>Schedule</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Book open"}'><strong>Book open</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44434}' data-sheets-numberformat='{"1":5,"2":"yyyy\". \"mm\". \"dd","3":1}'><strong>2021. 08. 26</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Book close"}'>Book close</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44442}' data-sheets-numberformat='{"1":5,"2":"yyyy\". \"mm\". \"dd","3":1}'>2021. 09. 03</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Allotment"}'><strong>Allotment</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44445}' data-sheets-numberformat='{"1":5,"2":"yyyy\". \"mm\". \"dd","3":1}'><strong>2021. 09. 06</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Subscription"}'><strong>Subscription</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44446}' data-sheets-numberformat='{"1":5,"2":"yyyy\". \"mm\". \"dd","3":1}'><strong>2021. 09. 07</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Payment"}'>Payment</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44449}' data-sheets-numberformat='{"1":5,"2":"yyyy\". \"mm\". \"dd","3":1}'>2021. 09. 10</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Listing"}'>Listing</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}'>-</td>
</tr>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table>
<div><div><h2>Pricing</h2></div></div>
<div><p>This IPO also uses PBR. The corporate value was determined after selecting the following five companies (one from Korea and four from China):</p></div>
<div><ol style="list-style-type: decimal;">
<li><a href="https://www.smartkarma.com/entities/daewoo-shipbuilding-marine-engineering" target="_blank" data-smartkarma-citation="entities:12531:1" rel="noopener">Daewoo Shipbuilding &amp; Marine Engineering (042660 KS)</a></li>
<li><a href="https://www.smartkarma.com/entities/china-shipbuilding-industry-co-ltd" target="_blank" data-smartkarma-citation="entities:5789:1" rel="noopener">China Shipbuilding Industry (601989 CH)</a></li>
<li>
<a href="https://www.smartkarma.com/entities/china-cssc-holdings-ltd-a" target="_blank" data-smartkarma-citation="entities:2464:1" rel="noopener">China CSSC Holdings Ltd A (600150 CH)</a> </li>
<li>
<a href="https://www.smartkarma.com/entities/yangzijiang-shipbuilding-holdings-limited" target="_blank" data-smartkarma-citation="entities:660:1" rel="noopener">Yangzijiang Shipbuilding (YZJSGD SP)</a> </li>
<li>
<a href="https://www.smartkarma.com/entities/cssc-offshore-marine-engg-group-co-ltd" target="_blank" data-smartkarma-citation="entities:5089:1" rel="noopener">Cssc Offshore &amp; Marine Engg Group (317 HK)</a> </li>
</ol></div>
<div>
<p>The <strong>average P/B multiple</strong> of these five valuation peers come at <strong>1.12x</strong> based on their 1Q21 financials.</p>
<table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
<col width="100">
<col width="100">
<col width="100">
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"FY2021 1Q based annualized net earnings based P/E"}'>As of FY2021 1Q</td>
<td data-sheets-value='{"1":2,"2":"Note"}'>Note</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"DSME"}'>DSME</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"China Shipbuilding Industry Company Ltd"}'>China Shipbuilding Industry Company Ltd</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"China CSSC Holdings Ltd"}'>China CSSC Holdings Ltd</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Yangzijiang Shipbuilding Holdings Ltd"}'>Yangzijiang Shipbuilding Holdings Ltd</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"CSSC Offshore and Marine Engineering Group Co Ltd"}'>CSSC Offshore and Marine Engineering Group Co Ltd</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Equity"}'>Equity</td>
<td data-sheets-value='{"1":2,"2":"A"}'>A</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":3635.589}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]'>₩3,635.6B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":15324.249}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]'>₩15,324.2B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":9411.029}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]'>₩9,411.0B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":6066.149}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]'>₩6,066.1B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":3057.162}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]'>₩3,057.2B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Non controlling interest"}'>Non-controlling interest</td>
<td data-sheets-value='{"1":2,"2":"B"}'>B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]'>₩0.0B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":157.608}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]'>₩157.6B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1247.454}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]'>₩1,247.5B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":186.08}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]'>₩186.1B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":550.639}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]'>₩550.6B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Applied equity"}'>Applied equity</td>
<td data-sheets-value='{"1":2,"2":"C=A-B"}'>C=A-B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":3635.589}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]' data-sheets-formula="=R[-2]C[0]-R[-1]C[0]">₩3,635.6B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":15166.641}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]' data-sheets-formula="=R[-2]C[0]-R[-1]C[0]">₩15,166.6B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":8163.575000000001}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]' data-sheets-formula="=R[-2]C[0]-R[-1]C[0]">₩8,163.6B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":5880.069}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]' data-sheets-formula="=R[-2]C[0]-R[-1]C[0]">₩5,880.1B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":2506.5229999999997}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]' data-sheets-formula="=R[-2]C[0]-R[-1]C[0]">₩2,506.5B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Reference market cap"}'>Reference market cap</td>
<td data-sheets-value='{"1":2,"2":"D"}'>D</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":3401.114}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]'>₩3,401.1B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":15590.917}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]'>₩15,590.9B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":11966.681}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]'>₩11,966.7B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":4552.47}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]'>₩4,552.5B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":3504.253}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]'>₩3,504.3B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"PBR"}'><strong>PBR</strong></td>
<td data-sheets-value='{"1":2,"2":"E=D÷C"}'><strong>E=D÷C</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.94}' data-sheets-numberformat='[null,2,"0.00x"]'><strong>0.94x</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1.03}' data-sheets-numberformat='[null,2,"0.00x"]'><strong>1.03x</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1.47}' data-sheets-numberformat='[null,2,"0.00x"]'><strong>1.47x</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.77}' data-sheets-numberformat='[null,2,"0.00x"]'><strong>0.77x</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1.4}' data-sheets-numberformat='[null,2,"0.00x"]'><strong>1.40x</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Average PBR"}'><strong>Average PBR</strong></td>
<td data-sheets-value='{"1":2,"2":"-"}'><strong>-</strong></td>
<td colspan="5" rowspan="1" style="text-align: center;" data-sheets-value='{"1":3,"3":1.12}' data-sheets-numberformat='[null,2,"0.00x"]'><strong>1.12x</strong></td>
</tr>
<tr><td colspan="7" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table>
<p>The averaged P/B multiple of 1.12x was applied to HHI's equity of ₩5,035.7B from the second quarter of this year. Then, an IPO flow of ₩936.0B (at the lower end of the indicative price band) was added. As a result, we have <strong>a reference market cap of ₩6.58T</strong>, giving <strong>a price per share of ₩74,094</strong>.</p>
</div>
<table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr><td colspan="3" style="width: 719.119px;" data-sheets-value='{"1":2,"2":"P/E valuation"}'>HHI: P/B valuation</td></tr>
<tr>
<td style="width: 239.702px;" data-sheets-value='{"1":2,"2":"Average PBR"}'>Average PBR</td>
<td style="width: 161.804px;" data-sheets-value='{"1":2,"2":"A"}'>A</td>
<td style="text-align: right; width: 317.614px;" data-sheets-value='{"1":3,"3":1.12}' data-sheets-numberformat='[null,2,"0.00x"]' data-sheets-formula="=R[-4]C[0]">1.12x</td>
</tr>
<tr>
<td style="width: 239.702px;" data-sheets-value='{"1":2,"2":"Applied equity"}'><strong>Applied equity</strong></td>
<td style="width: 161.804px;" data-sheets-value='{"1":2,"2":"B"}'><strong>B</strong></td>
<td style="text-align: right; width: 317.614px;" data-sheets-value='{"1":3,"3":5035.677}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]'><strong>₩5,035.7B</strong></td>
</tr>
<tr>
<td style="width: 239.702px;" data-sheets-value='{"1":2,"2":"IPO inflow"}'><strong>IPO inflow</strong></td>
<td style="width: 161.804px;" data-sheets-value='{"1":2,"2":"C"}'><strong>C</strong></td>
<td style="text-align: right; width: 317.614px;" data-sheets-value='{"1":3,"3":936}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]'><strong>₩936.0B</strong></td>
</tr>
<tr>
<td style="width: 239.702px;" data-sheets-value='{"1":2,"2":"Reference market cap"}'><strong>Reference market cap</strong></td>
<td style="width: 161.804px;" data-sheets-value='{"1":2,"2":"D=(AxB)+C"}'><strong>D=(AxB)+C</strong></td>
<td style="text-align: right; width: 317.614px;" data-sheets-value='{"1":3,"3":6577.587}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]'><strong>₩6,577.6B</strong></td>
</tr>
<tr>
<td style="width: 239.702px;" data-sheets-value='{"1":2,"2":"Post-IPO SO"}'>Post-IPO SO</td>
<td style="width: 161.804px;" data-sheets-value='{"1":2,"2":"E"}'>E</td>
<td style="text-align: right; width: 317.614px;" data-sheets-value='{"1":3,"3":88773116}' data-sheets-numberformat='[null,2,"#,##0",1]'>88,773,116</td>
</tr>
<tr>
<td style="width: 239.702px;" data-sheets-value='{"1":2,"2":"Price per share"}'><strong>Price per share</strong></td>
<td style="width: 161.804px;" data-sheets-value='{"1":2,"2":"F=D÷E"}'><strong>F=D÷E</strong></td>
<td style="text-align: right; width: 317.614px;" data-sheets-value='{"1":3,"3":74094}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}'><strong>₩74,094</strong></td>
</tr>
<tr><td colspan="3" style="width: 719.119px;" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table>
<p>The <strong>indicative price band</strong> lies between <strong>₩52,000 and ₩60,000</strong>. This is obtained by applying a <strong>discount rate of</strong><strong>19.02% to 29.82%</strong> to the market cap of ₩6.58T calculated through PBR. This much discount gives a <strong>P/B multiple of 0.77x to 0.89x</strong>.</p>
<table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"Pricing"}'>Pricing</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Low"}'>Low</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"High"}'>High</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Price"}'><strong>Price</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":52000}' data-sheets-numberformat='[null,2,"[$₩-412]#,##0",1]'><strong>₩52,000</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":60000}' data-sheets-numberformat='[null,2,"[$₩-412]#,##0",1]'><strong>₩60,000</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Base deal size"}'>Base deal size</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":936}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]' data-sheets-formula="=R[-1]C[0]*Terms!R8C2/1000000000">₩936.0B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1080}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]' data-sheets-formula="=R[-1]C[0]*Terms!R8C2/1000000000">₩1,080.0B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Institutional allotment (55%)"}'>- Institutional allotment (55%)</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":514.8000000000001}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]' data-sheets-formula="=R[-1]C[0]*55%">₩514.8B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":594}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]' data-sheets-formula="=R[-1]C[0]*55%">₩594.0B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Implied market cap"}'>Implied market cap</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":4616.202032}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]' data-sheets-formula="=R[-3]C[0]*R23C3/1000000000">₩4,616.2B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":5326.38696}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]' data-sheets-formula="=R[-3]C[0]*R23C3/1000000000">₩5,326.4B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Discount"}'><strong>- Discount</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.2981887872162388}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=(R24C3-R[-4]C[0])/R24C3"><strong>29.82%</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.1902178314033525}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=(R24C3-R[-4]C[0])/R24C3"><strong>19.02%</strong></td>
</tr>
<tr>
<td><strong>Implied PBR</strong></td>
<td style="text-align: right;"><strong>0.77x</strong></td>
<td style="text-align: right;"><strong>0.89x</strong></td>
</tr>
<tr><td colspan="3" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table>
</div>
</div>

Offering sizeHyundai Heavy Industries (HHI) offers 18M shares, which account for 25.43% of the pre-IPO total shares, of which 55-75% are allocated to institutions. It will be listed on KOSPI.





Offering size

Ticker
329180


Bourse
KOSPI


Offering
18,000,000


- % of pre-IPO SO
25.43%


- Institutional allotment
55.00~75.00%

Source: DART


Who is HHI?

HHI is the world's largest shipbuilding company based in Korea. Since its establishment in 1973, it has maintained the No. 1 position in the global shipbuilding market since 1983.
Prior to the establishment of the holding company in 2017, Hyundai Heavy Industries was at the apex of a circular shareholding structure that led to Chung Mong-jun (owner) → Hyundai Heavy Industries → Hyundai Samho Heavy Industries → Hyundai Mipo Dockyard → Hyundai Heavy Industries.
In June 2019, Hyundai Heavy Industries conducted a physical division to take over Daewoo Shipbuilding &amp; Marine Engineering. It was divided into an intermediate holding company, Korea Shipbuilding &amp; Offshore Engineering (KSOE), and an operating company, Hyundai Heavy Industries. For this reason, KSOE currently owns 100% of HHI.

Split
This IPO is a 100% primary offering. As a result, this offering will see a capital increase rate of 25.43% with a shareholding dilution of 20.28%. This event is free of any additional options: cornerstone, clawback, or greenshoe.






Split

Primary %
100.00%


Secondary %
0.00%


Capital increase rate
25.43%


Dilution
20.28%

Source: DART



Schedule

The book opens on August 26 (September 2 for local institutions) and runs until September 3. The allotment will be on September 6, finalizing an offering price. The subscription falls on September 7.






Schedule

Book open
2021. 08. 26


Book close
2021. 09. 03


Allotment
2021. 09. 06


Subscription
2021. 09. 07


Payment
2021. 09. 10


Listing
-

Source: DART


Pricing
This IPO also uses PBR. The corporate value was determined after selecting the following five companies (one from Korea and four from China):

Daewoo Shipbuilding &amp; Marine Engineering (042660 KS)
China Shipbuilding Industry (601989 CH)

China CSSC Holdings Ltd A (600150 CH) 

Yangzijiang Shipbuilding (YZJSGD SP) 

Cssc Offshore &amp; Marine Engg Group (317 HK) 


The average P/B multiple of these five valuation peers come at 1.12x based on their 1Q21 financials.












As of FY2021 1Q
Note
DSME
China Shipbuilding Industry Company Ltd
China CSSC Holdings Ltd
Yangzijiang Shipbuilding Holdings Ltd
CSSC Offshore and Marine Engineering Group Co Ltd


Equity
A
₩3,635.6B
₩15,324.2B
₩9,411.0B
₩6,066.1B
₩3,057.2B


Non-controlling interest
B
₩0.0B
₩157.6B
₩1,247.5B
₩186.1B
₩550.6B


Applied equity
C=A-B
₩3,635.6B
₩15,166.6B
₩8,163.6B
₩5,880.1B
₩2,506.5B


Reference market cap
D
₩3,401.1B
₩15,590.9B
₩11,966.7B
₩4,552.5B
₩3,504.3B


PBR
E=D÷C
0.94x
1.03x
1.47x
0.77x
1.40x


Average PBR
-
1.12x

Source: DART


The averaged P/B multiple of 1.12x was applied to HHI's equity of ₩5,035.7B from the second quarter of this year. Then, an IPO flow of ₩936.0B (at the lower end of the indicative price band) was added. As a result, we have a reference market cap of ₩6.58T, giving a price per share of ₩74,094.








HHI: P/B valuation

Average PBR
A
1.12x


Applied equity
B
₩5,035.7B


IPO inflow
C
₩936.0B


Reference market cap
D=(AxB)+C
₩6,577.6B


Post-IPO SO
E
88,773,116


Price per share
F=D÷E
₩74,094

Source: DART


The indicative price band lies between ₩52,000 and ₩60,000. This is obtained by applying a discount rate of19.02% to 29.82% to the market cap of ₩6.58T calculated through PBR. This much discount gives a P/B multiple of 0.77x to 0.89x.








Pricing
Low
High


Price
₩52,000
₩60,000


Base deal size
₩936.0B
₩1,080.0B


- Institutional allotment (55%)
₩514.8B
₩594.0B


Implied market cap
₩4,616.2B
₩5,326.4B


- Discount
29.82%
19.02%


Implied PBR
0.77x
0.89x

Source: DART





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