The mid-sized shipyards, whose value has surged due to the domestic shipbuilding industry boom, are moving to recover and raise funds. K Shipbuilding is preparing to sell its entire stake, including management rights, with a corporate value between 500 billion and 1 trillion won. Similarly, K Shipbuilding is going through the initial public offering (IPO) process with a valuation of up to 1.9 trillion won. It is reported that several small and medium-sized shipbuilding and material companies have expressed their willingness to sell if the price is right.
However, it is known that there is a significant gap between corporations and market participants regarding the appropriate corporate value. The shipbuilding industry is a typical cyclical industry that goes through booms and busts. Currently, there is a backlog of several years' worth of work, but it could enter a recession at any time. The shipbuilding industry experienced a long-term slump after the global financial crisis in 2008, leading to the closure of many shipyards and harsh restructuring for those that survived.
According to industry sources on the 11th, K Shipbuilding is in the process of selecting underwriters aiming to find a new owner in the second half of the year. The target for sale is the 99.58% equity stake held by the UAMCO·KHI consortium. K Shipbuilding is reported to have set a condition for selecting underwriters that it would sell to a corporation ranked within the top 30 in the business sector.
K Shipbuilding rose to the fourth place in the world by order backlog during its STX Shipbuilding days. After experiencing a liquidity crisis following the 2008 financial crisis, it underwent over a decade of creditor management and court receivership. In 2021, the KHI·UAMCO consortium acquired it for 250 billion won, and it has returned to the market after four years. Last year, it recorded sales of 934.7 billion won and an operating profit of 11.2 billion won, successfully transitioning to profitability for the first time in eight years.
Daehan Shipbuilding, with similar sales figures, recently applied for preliminary examination for listing on the securities market. It presented an estimated market capitalization based on the public offering price of between 1.6181 trillion and 1.9263 trillion won. In 2022, KHI acquired Daehan Shipbuilding for around 200 billion won, marking nearly a tenfold increase in three years. Daehan Shipbuilding recorded sales of 1 trillion won and an operating profit of 158 billion won last year. It is expected that Daehan Shipbuilding will pursue business expansion using the public offering funds.
It is reported that groups not involved in the shipbuilding industry are showing interest in K Shipbuilding. The advantage of Daehan Shipbuilding is its profit margin of over 10%. The outcome of the sales and IPO of the two shipyards is expected to influence the valuation of other small and medium-sized shipbuilding and material companies.
A source in the shipbuilding industry said, "The domestic shipbuilding industry has experienced a long period of recession in the past. While there is currently a backlog of work, many are seeking to consolidate while the market is good, as it is uncertain when orders will disappear."