Hyundai Engineering to list in February, invest in the future
Hyundai Engineering is preparing to list into a volatile market, confident that steady business from related companies will help it weather any storms.
It is scheduled to go public on the Korea Exchange on Feb. 15 after selling 16 million shares priced 57,900 won ($48) to 75,700 won.
Hyundai Engineering is Korea's sixth largest construction company by sales and is engaged in civil and infrastructure engineering and construction.
Its market cap after listing will be between 4.63 trillion won and 6.05 trillion won, according to Park Se-ra, an analyst at Shinyoung Securities. The company will likely be the largest Korean construction company by market capitalization when it goes public.
Hyundai Engineering & Construction's market value is 4.5 trillion won as of Tuesday, and Samsung Engineering 4.3 trillion won.
Hyundai Engineering's net profit last year through the third quarter was 243.19 billion won, down 28 percent on year.
Park forecasts the company's earning per share in 2021 at an estimated 4,152 won. If the stock prices at the high end of the range, its price-earnings ratio will be about 17.
Samsung Engineering trades at about 18 times earnings, and Hyundai Engineering & Construction trades at about a 38, according to Samsung Securities.
The company plans to invest 1.5 trillion won by 2025 in eco-friendly businesses, like constructing micro-modular reactors (MMR), incinerating waste and producing hydrogen using plastic waste and ammonia.
MMR is an energy system that has the potential to deliver safe, clean and cost-effective electricity and heat.
The company earlier this month teamed up with USNC, a Seattle-based company specializing in MMRs, to construct a demonstration plant in Toronto earlier. Operation is set to begin in 2025.
Hyundai Engineering announced earlier this month that it teamed up with AAR, a local startup that has ammonia-based hydrogen production technology, to market a system that produces high-purity hydrogen without generating carbon dioxide by decomposing ammonia. It plans to generate profit from hydrogen production using ammonia starting in 2024.
The company is confident that sales to related companies will help it through any instability in the markets.
"Continuous revenue generated from the group helps us prepare for market volatility and achieve solid finance," Hyundai Engineering said in a statement.
Hyundai Engineering & Construction owns 38.62 percent of Hyundai Engineering. and Hyundai Glovis with 11.67 percent.
The Kospi is down 9 percent year to date, to year-plus lows, while the S&P 500 is down 12 percent already in 2022.
The two-day subscription period for institutional investors ends Wednesday. Subscriptions for retail investors will run for two days from Feb. 3. Mirae Asset Securities, KB Securities and Goldman Sachs are underwriters of the IPO.
BY JIN MIN-JI [email@example.com]