Hyundai Heavy Industries' Shares Soar in Stock-Market Debut

File image courtesy HHI

Published Sep 17, 2021 4:46 PM by The Maritime Executive

Hyundai Heavy Industries (HHI) shares made a resounding debut on the Korean Exchange, with the share price quickly soaring by as much as 125 percent above the initial public offer (IPO) price.

The company, which is one of the world’s largest shipbuilders, saw its share price hit nearly $115 during the first day of trading - more than double the company’s initial offer price of about $51. Trading eventually settled at a more modest average of about $58.

The rally in the share price was attributed to significant interest from domestic and institutional investors, who sought to snap up a piece of the company in early trading. In a presale subscription period completed last week, HHI announced that it had raised about $935 million in a heavily-oversubscribed IPO.

A total of 1,633 domestic and foreign institutional investors placed bids to buy its shares during the IPO. The winners secured a combined stake of about 20 percent.

“We would like to thank all the institutional investors who valued both our capacity and growth potential high. We are certain that our company will secure sweeping competitiveness by opening a new chapter through the IPO,” said Han Young-seuk, HHI's CEO, in a statement last week.

The company has announced that it intends to use the proceeds from the IPO to develop environmentally-friendly vessels, research vessel automation and build out advanced production facilities in order to strengthen its competitiveness.

HHI is wholly owned by Korea Shipbuilding & Offshore Engineering (KSOE), the intermediate holding company for HHI Group’s shipbuilding operations. KSOE was formed in 2019 as part of HHI Group's bid to acquire Daewoo Shipbuilding & Marine Engineering, a $1.8 billion deal which is still awaiting regulatory approval.

The strong debut on the Korean Exchange sees HHI become the second-largest listed shipbuilder with a market capitalization of $4.5 billion. KSOE, which is already listed, has a market value of $7.4 billion.

The IPO comes as HHI sees a surge in newbuild orders, driven in part by soaring demand for boxships. Over the seven-month period to July, it increased its backlog by $8.6 billion.

Clarksons predicts that new orders are expected to rise by 21 percent worldwide this year, reaching 974 ships and a total of 23.8 million compensated gross tons. From 2022 to 2025, global new orders are forecast to reach 35.1 million CGTs, or 1,552 ships, on an annual average.

Top Image: Hyundai Heavy Industries cranes and ship yard (SarahTz / CC BY-SA 2.0)