Spun-off Hyundai Heavy to be listed today
Hyundai Heavy Industries (HHI) and its three spun-off affiliates — Hyundai Robotics, Hyundai Electric & Energy System and Hyundai Construction Equipment — will be listed on the Seoul Bourse today.
Analysts came up with rosy prospects that the four companies will enjoy more than 30 percent growth in terms of their market capitalization in time with the inauguration of the new president.
The continuous rise in the benchmark KOSPI index and HHI’s fine performance in the first quarter also support such expectations. HHI posted 618.7 billion won ($546 million) in operating profit last quarter — up 90.3 percent year-on-year and 73.65 percent higher than brokerage estimations.
The shipbuilder’s market value was 12.5 trillion won as of March 30, when its stock trading was suspended due to the spinoff.
Meritz Securities expects the four firms’ market capitalization to reach 19.9 trillion won after listing.
“HHI will benefit from a recovery in the shipbuilding industry,” Meritz analyst Kim Hyun said. “Hyundai Robotics has growth potential. Hyundai Construction Equipment has competitiveness in emerging markets and Hyundai Electric will benefit from electronics market growth.”
The analyst recently raised HHI’s target price from 200,000 won to 230,000 won. The company’s clos- ing price was 165,000 won on March 30.
Eugene Investment & Securities expects the four companies’ market capitalization will reach 16.5 trillion won. NH Investment & Securities said their market value will be around 15 trillion won.
Analysts varied in picking the most prominent firm among the four. NH opted for Hyundai Robotics, while Eugene went for Hyundai Electric and Hyundai Construction Equipment.
On March 27, 98 percent of HHI shareholders approved the company’s plan to split its non-core businesses from the world’s largest shipbuilder, seeking to boost each business unit’s competitiveness.
This was part of an effort to overcome heavy debts. The spinoff is expected to reduce the company’s debt ratio from 106 percent to 95 percent.
Under the plan, Hyundai Robotics will likely be a holding company of HHI group. HHI already declared it would establish the industrial robot firm as a holding company in an investment prospectus submitted to the stock market.
Hyundai Robotics owns Hyundai Oilbank and Hyundai Global Service as subsidiaries. The refiner and the marine service provider would finance Hyundai Robotics to acquire shares of the affiliates.
In addition, some observers said Hyundai Samho Heavy Industries and Hyundai Mipo Dockyard are likely to merge with HHI, so the shipbuilders can abolish their cross-shareholding structure.