Hyundai Oilbank calls off plan to go public, cites market conditions

Hyundai Oilbank gas station [HYUNDAI OILBANK]

Hyundai Oilbank on Thursday called off its plan to go public due to unfavorable market conditions, becoming the latest Korean company to back down from listing.

The oil refiner, 73.9 percent owned by HD Hyundai, held a board meeting on Wednesday to cancel its initial public offering (IPO) to the main bourse Kospi slated for the latter half of this year, citing rising inflation, rate hikes and economic woes.

Hyundai Oilbank filed for a preliminary screening in December last year and received approval for the Korea Exchange in June. Analysts forecast its market cap would reach 10 trillion won ($7.6 billion) if the IPO had been successful.

"We decided that we cannot continue with the IPO plan, as the company's value would not be recognized properly in the current market situation despite its strong performance," said a Hyundai Oilbank spokesperson.

Backed by strong recovery of the global oil demand after the pandemic, the company logged a record revenue of 20.6 trillion won ($15.7 billion) last year, up 50.5 percent on year, and an operating profit of 1.14 trillion won. Net profit was 528.1 billion won, a turnaround from 2020's net loss of 359.3 billion won.

Despite high oil prices, the stock prices of other local oil refiners took a downturn recently due to rising economic concerns and unfavorable situations in the stock market. Kospi-listed S-oil traded at 93,700 won Thursday, down from 115,000 won on June 2. SK Innovation traded at 183,000 won, down from 215,000 won on June 2.

Crude oil prices, which had been soaring due to the Russia-Ukraine war and demand recovery after the pandemic, began to inch down as of late. Dubai crude oil prices stood at $104.39 per barrel on Thursday, a month after hitting $118.94 on June 10.

Inflation woes, the increasing level of U.S. oil inventories and a resurgence in Covid-19 cases are cited as factors.

This was the company's third attempt at an IPO, following attempts in 2012 and 2019.

Hyundai Oilbank suspended its IPO in 2012 due to plunging oil prices. In 2019, HD Hyundai, then Hyundai Heavy Industries Holdings, decided to sell a 17 percent share of the company to Saudi Arabia’s Aramco in a pre-IPO deal, putting a pause on the IPO process.

With the Kospi hovering at the 2,300 level, far from its 3,316 peak in 2021, many companies have halted their plans to go public. Hyundai Engineering canceled its IPO plan in January, and SK shieldus and One store in May.

BY SHIN HA-NEE [shin.hanee@jooongang.co.kr]