APAC IPOs & Placements, Aequitas Research

Clarence Chu

APAC IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

Hyundai Engineering   / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/hyundai-engineering-co-ltd" target="_blank" data-smartkarma-citation="entities:33008:1" rel="noopener">Hyundai Engineering Co Ltd (HEC KS)</a> is looking to raise up to US$1bn in its upcoming Korea IPO. </li>
<li>Hyundai Engineering is an engineering firm that covers the entire life-cycle, from procurement, development, maintenance post-completion of the building/project.</li>
<li>As per Korea Construction Association in 2021, it ranks 6th position, with a construction capacity of KRW8.5 tn.</li>
</ul>



Hyundai Engineering Co Ltd (HEC KS) is looking to raise up to US$1bn in its upcoming Korea IPO. 
Hyundai Engineering is an engineering firm that covers the entire life-cycle, from procurement, development, maintenance post-completion of the building/project.
As per Korea Construction Association in 2021, it ranks 6th position, with a construction capacity of KRW8.5 tn.


Hyundai Engineering Pre-IPO - Order Backlog Aids Visibility However, Margins Have Been Fluctuating

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

<p><a href="https://www.smartkarma.com/entities/sm-line-corp" target="_blank" data-smartkarma-citation="entities:34535:1" rel="noopener">SM Line Corp (076710 KS)</a> (SML) is looking to raise US$710m by selling a mix of primary and secondary shares in its South Korea IPO.</p><p>SML, a subsidiary of Samra Midas (SM) Group, is a global shipping company that mainly engages in maritime freight transportation. It also operates a construction business that provides housing construction and civil engineering services.</p><p>We will take a look at SML’s fundamentals, industry outlook and share our thoughts on valuation.</p>

SM Line Corp (076710 KS) (SML) is looking to raise US$710m by selling a mix of primary and secondary shares in its South Korea IPO.SML, a subsidiary of Samra Midas (SM) Group, is a global shipping company that mainly engages in maritime freight transportation. It also operates a construction business that provides housing construction and civil engineering services.We will take a look at SML’s fundamentals, industry outlook and share our thoughts on valuation.

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<div class="content-highlight"><p>Our base case valuation of SM Line Corp is implied market cap of 1.3 trillion won or 14,837 won per share. This represents 18% lower than the low end of the IPO price range level of 18,000 won. Given the lack of upside relative to the IPO price range, we would avoid this IPO. To value SM Line Corp, we used an EV/EBITDA multiple of 2.0x, which is the median valuation multiple of its peers in 2022. </p></div><p>Due to the sharp increase in container freight rates in the past year, there has also been a significant increase in new orders for these container ships, especially in 2021. In addition, there are increasing indications that suggest the container shipping industry may undergo a sharp contraction starting 2023, especially as these new container ships come to market.</p><div class="content-highlight">
<p>SM Group has a very complicated shareholding structure and this remains one of the key risks of SM Line Corp. Major shareholders of SM Line Corp include SM Samra Midas (41.4% stake), <a href="https://www.smartkarma.com/entities/tk-chemical-corp" target="_blank" data-smartkarma-citation="entities:13428:1" rel="noopener">Tk Chemical (104480 KS)</a> (29.55%), and Samra Corp (29.09%). Woo Oh-Hyun (born in 1953), the chairman of the SM Group, owns a 74% stake in Samra Midas. His first son Woo Ki-Won owns the remaining 26% stake in Samra Midas. Woo Oh-Hyun also owns a 68.8% stake in Samra Corp. Given that the chairman Woo O-Hyun is 69 years old, there may be some discussions of a transfer of the controlling ownership of SM Line Corp to his first son over the next 2-3 years.</p>
<p>This will remain a key stumbling block for the stock as many retail investors in Korea have concerns that the company could intentionally depress the company's share price in order to reduce the potential inheritance taxes associated with the share transfer from the father to his son.</p>
</div>

Our base case valuation of SM Line Corp is implied market cap of 1.3 trillion won or 14,837 won per share. This represents 18% lower than the low end of the IPO price range level of 18,000 won. Given the lack of upside relative to the IPO price range, we would avoid this IPO. To value SM Line Corp, we used an EV/EBITDA multiple of 2.0x, which is the median valuation multiple of its peers in 2022. Due to the sharp increase in container freight rates in the past year, there has also been a significant increase in new orders for these container ships, especially in 2021. In addition, there are increasing indications that suggest the container shipping industry may undergo a sharp contraction starting 2023, especially as these new container ships come to market.
SM Group has a very complicated shareholding structure and this remains one of the key risks of SM Line Corp. Major shareholders of SM Line Corp include SM Samra Midas (41.4% stake), Tk Chemical (104480 KS) (29.55%), and Samra Corp (29.09%). Woo Oh-Hyun (born in 1953), the chairman of the SM Group, owns a 74% stake in Samra Midas. His first son Woo Ki-Won owns the remaining 26% stake in Samra Midas. Woo Oh-Hyun also owns a 68.8% stake in Samra Corp. Given that the chairman Woo O-Hyun is 69 years old, there may be some discussions of a transfer of the controlling ownership of SM Line Corp to his first son over the next 2-3 years.
This will remain a key stumbling block for the stock as many retail investors in Korea have concerns that the company could intentionally depress the company's share price in order to reduce the potential inheritance taxes associated with the share transfer from the father to his son.


Korea / Special Sits, Pairs, Index Rebalancing, Clepsydra Capital

Sanghyun Park

Korea / Special Sits, Pairs, Index Rebalancing

Clepsydra Capital

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

<h2>Offering terms</h2><p>One of Korea's major flag-carrying maritime transporter (only behind HMM in size), SM Line, put out the IPO prospectus. It will be listed on the KOSDAQ market around late November. The total offering is 34 million shares, representing 50% of the current number of shares outstanding. The institutional allotment is 68.5~75.0% of the offering.</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":"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":"TBA"}' data-sheets-numberformat='{"1":2,"2":"[$₩-412]#,##0","3":1}' data-sheets-formula="=R[1]C[-2]">076710</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":"Pre-IPO SO"}'>Pre-IPO SO</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":67688440}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=R[1]C[-2]">67,688,440</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":33844220}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=R[3]C[-2]"><strong>33,844,220</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"- % of SO"}'><strong>- % of SO</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.5}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=Terms!R[5]C[-2]"><strong>50.00%</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>68.50~75.00%</strong></td>
</tr>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table><p>This is a split offering at a 50:50 ratio. So the capital increase rate is 25%, with a share dilution at 20%.</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":"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":0.5}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=Terms!R[3]C[-2]"><strong>50.00%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Secondary %"}'><strong>Secondary %</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.5}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=Terms!R[4]C[-2]"><strong>50.00%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Post-IPO shares outstanding"}'>Post-IPO shares outstanding</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":84610550}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=R[-9]C[0]+Terms!R[2]C[-2]">84,610,550</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Capital increase rate"}'>Capital increase rate</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.25}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=Terms!R[4]C[-2]">25.00%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Dilution"}'>Dilution</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.2}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=Terms!R[4]C[-2]">20.00%</td>
</tr>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table><p>The book opens on November 1, and the allotment will be disclosed on November 3. The subscription follows on November 4, followed by the payment on November 9. The listing date will be announced later.</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":44501}' data-sheets-numberformat='{"1":5,"2":"yyyy\". \"mm\". \"dd","3":1}'><strong>2021. 11. 01</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Book close"}'><strong>Book close</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44502}' data-sheets-numberformat='{"1":5,"2":"yyyy\". \"mm\". \"dd","3":1}'><strong>2021. 11. 02</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Allotment"}'>Allotment</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44503}' data-sheets-numberformat='{"1":5,"2":"yyyy\". \"mm\". \"dd","3":1}'>2021. 11. 03</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Subscription"}'>Subscription</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44446}' data-sheets-numberformat='{"1":5,"2":"yyyy\". \"mm\". \"dd","3":1}'>2021. 11. 04</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Payment"}'><strong>Payment</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44449}' data-sheets-numberformat='{"1":5,"2":"yyyy\". \"mm\". \"dd","3":1}'><strong>2021. 11. 09</strong></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><p>The share of the largest shareholder will be 60% after listing. The stake is locked for six months. And the amount of inflow through the public offering is 40% of the post-IPO total shares.</p><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"Shareholders"}'>Shareholders</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Shares"}'>Shares</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Post-IPO shareholding %"}'>Post-IPO shareholding %</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Lockup"}'>Lockup</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"TK Chemicals"}'>TK Chemicals</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":18646232}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>18,646,232</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.2204}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>22.04%</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"6 months"}'>6 months</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Samra Midas"}'>Samra Midas</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":17846733}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>17,846,733</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.2109}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>21.09%</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"6 months"}'>6 months</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Samra Inc"}'>Samra Inc</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":14273365}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>14,273,365</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.1687}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>16.87%</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"6 months"}'>6 months</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Major shareholder"}'><strong>- Major shareholder total</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":50766330}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=sum(R[-3]C[0]:R[-1]C[0])"><strong>50,766,330</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.6}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=sum(R[-3]C[0]:R[-1]C[0])"><strong>60.00%</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"6 months"}'><strong>6 months</strong></td>
</tr>
<tr><td colspan="4"></td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"ESOP (post-IPO)"}'>ESOP (post-IPO)</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":507663}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>507,663</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.006}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>0.60%</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"1 year"}'>1 year</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"IPO"}'>IPO</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":33336557}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>33,336,557</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.394}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>39.40%</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>-</td>
</tr>
<tr><td colspan="4" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table>

Offering termsOne of Korea's major flag-carrying maritime transporter (only behind HMM in size), SM Line, put out the IPO prospectus. It will be listed on the KOSDAQ market around late November. The total offering is 34 million shares, representing 50% of the current number of shares outstanding. The institutional allotment is 68.5~75.0% of the offering.





Offering size

Ticker
076710


Bourse
KOSPI


Pre-IPO SO
67,688,440


Offering
33,844,220


- % of SO
50.00%


- Institutional allotment
68.50~75.00%

Source: DART

This is a split offering at a 50:50 ratio. So the capital increase rate is 25%, with a share dilution at 20%.





Split

Primary %
50.00%


Secondary %
50.00%


Post-IPO shares outstanding
84,610,550


Capital increase rate
25.00%


Dilution
20.00%

Source: DART

The book opens on November 1, and the allotment will be disclosed on November 3. The subscription follows on November 4, followed by the payment on November 9. The listing date will be announced later.





Schedule

Book open
2021. 11. 01


Book close
2021. 11. 02


Allotment
2021. 11. 03


Subscription
2021. 11. 04


Payment
2021. 11. 09


Listing
-

Source: DART

The share of the largest shareholder will be 60% after listing. The stake is locked for six months. And the amount of inflow through the public offering is 40% of the post-IPO total shares.








Shareholders
Shares
Post-IPO shareholding %
Lockup


TK Chemicals
18,646,232
22.04%
6 months


Samra Midas
17,846,733
21.09%
6 months


Samra Inc
14,273,365
16.87%
6 months


- Major shareholder total
50,766,330
60.00%
6 months



ESOP (post-IPO)
507,663
0.60%
1 year


IPO
33,336,557
39.40%
-

Source: DART



SM Line IPO: Offering Terms, Valuation Details, & Risk Analysis

<div class="content-highlight">
<p>SM Line Corp is getting ready to complete its IPO in the KOSDAQ exchange in the next few weeks. This is the first shipping (marine transportation) company IPO in Korea in 14 years. SM Line Corp is trying to capitalize on the highly bullish environment for shipping companies globally.</p>
<p>The IPO price range is from 18,000 won to 25,000 won. At the high end of the IPO price range, the implied market cap of the company is 2.1 trillion won. The IPO offering amount range is from 609 billion won to 846 billion won. The book building for the institutional investors starts on 1 November. The lead underwrite of the IPO is NH Investment &amp; Securities. </p>
<p>The company plans to use the<a href="https://pulsenews.co.kr/view.php?year=2021&amp;no=826592" target="_blank" rel="noopener"> IPO proceeds</a> to purchase more eco-friendly, green vessels to better respond to stricter carbon emission rules to be applied from 2022. It is also considering on buying used vessels that can be used immediately to capitalize on the current global ship shortages. </p>
</div>


SM Line Corp is getting ready to complete its IPO in the KOSDAQ exchange in the next few weeks. This is the first shipping (marine transportation) company IPO in Korea in 14 years. SM Line Corp is trying to capitalize on the highly bullish environment for shipping companies globally.
The IPO price range is from 18,000 won to 25,000 won. At the high end of the IPO price range, the implied market cap of the company is 2.1 trillion won. The IPO offering amount range is from 609 billion won to 846 billion won. The book building for the institutional investors starts on 1 November. The lead underwrite of the IPO is NH Investment &amp; Securities. 
The company plans to use the IPO proceeds to purchase more eco-friendly, green vessels to better respond to stricter carbon emission rules to be applied from 2022. It is also considering on buying used vessels that can be used immediately to capitalize on the current global ship shortages. 


South Korea

SM Line Corporation provides marine transportation services. The Company offers container transport, refrigerated freight transport, dangerous goods transport, and other services. SM Line provides services worldwide.

SM Line Corp (076710 KS)

Hyundai Engineering Pre-IPO - Order Backlog Aids Visibility However, Margins Have Been Fluctuating

Hyundai Engineering Co Ltd (HEC KS) is looking to raise up to US$1bn in its upcoming Korea IPO. As per Korea Construction Association in 2021, it...

Clarence Chu

SM Line IPO - Opportunistic Listing

SM Line Corp (076710 KS) (SML) is looking to raise US$710m by selling a mix of primary and secondary shares in its South Korea IPO.

Sumeet Singh

SM Line Corp - IPO Valuation Analysis

Our base case valuation of SM Line Corp is implied market cap of 1.3 trillion won or 14,837 won per share. This represents 18% lower than the low...

Douglas Kim

SM Line IPO: Offering Terms, Valuation Details, & Risk Analysis

SM Line, one of Korea's two flag-carrying maritime transporters, plans to go public. This post details the offering terms and discusses the...

Sanghyun Park

SM Line Corp IPO Preview

SM Line Corp is getting ready to complete its IPO in the KOSDAQ exchange in the next few weeks. At the high end of the IPO price range, the implied...

Douglas Kim