HD Hyundai Marine Solution aims for top spot in global ship repair market

When the global shipbuilding industry was reeling from the economic slowdown in recent years, South Korea’s HD Hyundai Marine Solution Co., a ship repair and maintenance service unit of the world’s No. 1 shipbuilder HD Hyundai Heavy Industries Co., wasn’t worried.

Hyundai Marine wasn’t severely affected by the global slowdown during the pandemic. Rather, the company benefited from growing demand for vessel maintenance, repair and overhaul (MRO) and retrofitting projects from ship owners.

“HD Hyundai Marine Solution is the only company that provides ship repair, maintenance and retrofitting all at once. There’s no company like us,” said Chief Executive Lee Ki-dong during a press conference at the company’s Global Research Center in Bundang, south of Seoul, on Wednesday.

IPO IN APRIL

The press conference comes ahead of Hyundai Marine’s planned initial public offering as early as this month.

The company is going public to raise some 370 billion won ($274 million) via an IPO on Korea’s main Kospi bourse.

Hyundai Marine has started its listing process and is scheduled to receive subscriptions from retail investors April 25-26, 2024.

HD Hyundai Co., the parent of HD Hyundai Heavy Industries, is the largest shareholder of Hyundai Marine with a 62% stake, followed by US private equity firm KKR & Co., which owns a 38% stake.

“Proceeds from the IPO will go to building warehouses for ship parts and components in Korea and abroad,” Lee said.

BURGEONING RETROFITTING BUSINESS

Hyundai Marine, a spin-off from Hyundai Heavy Industries, was founded in 2016 as Hyundai Global Service Co. It changed its name to HD Hyundai Marine to expand its business beyond vessel aftersales services.

It seeks to expand its presence in the vessel retrofitting, bunkering and digital solution sectors.

In February, it signed a contract with Chevron Corp. to install emission-reducing systems on the US firm’s liquefied natural gas (LNG) carriers.

Hyundai Marine is also developing a wide range of eco-friendly marine technologies to lead the vessel retrofitting market set to burgeon in line with tightening marine environment protection regulations.

The CEO said the company is currently in talks with seven companies to retrofit aged LNG tankers to floating storage regasification units (FSRUs).

Thanks to its aggressive business diversification, Hyundai Marine posted an operating profit of 201.5 billion won on sales of 1.43 trillion won last year.

Its operating profit margin stood at 14.1%, much higher than global peer marine engineering companies and airplane MRO firms.

The company’s depreciation costs are relatively small as facility investment accounts for a mere 0.2% of its entire sales revenue, company officials said.

“We have huge growth potential. We don’t have any strong competitors,” the CEO said.

Write to Hyung-Kyu Kim at khk@hankyung.com

In-Soo Nam edited this article.