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Hyundai to step up push into eco-friendly ships with IPO

The world's top shipbuilder is set to list on Kospi on Sept. 16 to raise up to $1 billion

By Sep 02, 2021 (Gmt+09:00)

Hyundai to step up push into eco-friendly ships with IPO
Hyundai Heavy Industries Co. plans to spend 70% of the proceeds from its initial public offering on the Korea Exchange, or about 760 billion won ($655 million), to develop eco-friendly and digital shipbuilding technologies, as well as building smart shipyards and hydrogen-related facilities.

As the South Korean shipbuilder on Thursday began two-day bookbuilding on its Sept. 16 stock market listing, its Chief Executive Han Young-seuk said the company will concentrate on further widening its gap with competitors by advancing into high value-added models.

"We will invest heavily in eco-friendly future technologies and solidify our No. 1 position for the next 50 years," Han said during an online presentation on Thursday ahead of the IPO. 

Specifically, the sum of 760 billion won will break down into 310 billion won for eco-friendly shipbuilding and digital transformation of its shipbuilding process. Another 320 billion won will be allocated to building smart shipyards equipped with artificial intelligence technology by 2030 in order to enhance their productivity. The remaining 130 billion won will be put into hydrogen-related infrastructure facilities.

The world's largest shipbuilder, wholly owned by Korea Shipbuilding & Offshore Engineering Co. (KSOE), plans to float 18 million shares, or 20% of its shares outstanding. It is expected to raise as much as 1.08 trillion won ($1 billion) at the top of its price guidance.

Detailed Development Plans for Eco-friendly and Self-driving Vessels:
 
Eco-friendly, high-end vessels Ships powered by ammonia or hydrogen-based fuel cells
Electric propelled systems
Cargo tanks of LNG carriers
Self-driving vessels Digital twin and other autonomous navigation technology

In the offshore hydrogen infrastructure segment, Hyundai aims to expand its presence with heavy investments in the facilities related to offshore renewable energy generation and green hydrogen production, as well as hydrogen transportation.

It has racked up $8.6 billion orders for 59 vessels this year as of the end of July, recording its largest amount of orders for the same period since 2014. Last month, it added a 1.65 trillion won order from Denmark’s A.P. Moller-Maersk to build eight very large container ships fueled by methanol with an option for four more vessels. The ships will become the world's first large carriers powered by the non-carbon fuel.

The new orders pulled its net debt lower to 34.9% against its equity capital. The ratio is one-third of the average of domestic shipbuilders at 107.9%.

Last year, Hyundai Heavy earned 32.5 billion won in operating profit on sales of 8.3 trillion won on a consolidated basis. 

MSI, a UK-based shipbuilding and maritime research firm, forecasts the global shipbuilding industry will rebound from a 13-year slump caused by the 2008 global financial crisis and shift into a seller's market with an annual average growth of 16% until 2025.

Hyundai Heavy's sister companies are also preparing to go public, including Hyundai Oilbank Co., Hyundai Samho Heavy Industries Co. and Hyundai Global Corp., an after-sales service company.

Their parent Hyundai Heavy Industries Group has acquired 2 trillion won worth of a majority stake in Daewoo Shipbuilding & Marine Engineering Co. and 850 billion won worth of a controlling stake in Doosan Infracore Co., a construction equipment manufacturer between 2020 and early 2021.

Write to Ye-jin Jun at ace@hankyung.com

Yeonhee Kim edited this article.

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