Daily Brief South Korea: HD Hyundai Marine Solution , Kum Yang and more

In today’s briefing:

Local Color on HD Hyundai Marine Solution’s Excessive IPO Valuation
HD Hyundai Marine Solution IPO – Strong Profitability Growth but Lacking in Disclosures
Kum Yang: Auditor Raises Flags on Viability as a Going Concern + Chairman Ryu Could Sell Shares

Local Color on HD Hyundai Marine Solution’s Excessive IPO Valuation

Valuation controversy arises from comparing HD Hyundai Marine Solution, a ship AS specialist, with diverse global companies, leading to a target market cap of ₩5T.
HD KSOE’s inclusion worsens the valuation controversy. Applying HD KSOE’s last year PER without adjusting for a significant one-off profit seems to inflate HD Hyundai Marine Solution’s PER.
Currently, major local IPO funds see HD Hyundai Marine’s valuation nearing ₩4T as excessive, despite the industry’s revival and potential growth in eco-friendly ship conversions, impacting the upcoming bookbuilding process.

HD Hyundai Marine Solution (443060 KS) is looking to raise up to US$555m in its Korean IPO.
HD Hyundai Marine Solution (HMS from hereon) is a ship aftermarket service provider that provides necessary services throughout a ship’s life cycle after the delivery of a new ship.
In this note, we talk about the company’s historical performance.

On 28 March, the external auditor of Kum Yang (Samil PriceWaterhouseCoopers) raised warnings about the viability of Kum Yang as a going concern.
The auditor also mentioned increasing probability of Chairman Ryu of Kum Yang potentially selling a portion of his shares to raise further capital.
It is RARE for an auditor to raise concerns about a company’s viability of the entity as a going concern. This is likely to negatively impact Kum Yang’s share price.

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