This article was published on Jan. 9, 2025, at 5:15 p.m. on the CHOSUNBIZ MoneyMove site.
Next month, the management rights of HYUNDAI HYMS will be put up for sale. This follows the lifting of the lock-up period on the equity held by the largest shareholder, private equity fund manager J&PE. With the expectation that the domestic shipbuilding industry will benefit from the inauguration of U.S. President Donald Trump's second term, it is anticipated that the management rights may sell at a significant premium.
According to investment banking (IB) industry sources on the 9th, J&PE plans to begin the sale process for the management rights of HYUNDAI HYMS in early February. The target for the sale is the 53.06% equity held by J&PE through the special purpose company (SPC) Hercules Holdings.
The equity held by J&PE in HYUNDAI HYMS has been under lock-up for one year following the company's listing. Since the listing date was Jan. 26 of last year, they will be able to sell all their holdings by the end of this month.
HYUNDAI HYMS is a shipbuilding materials company primarily engaged in the production of ship blocks. A ship block refers to a unit that divides a ship into several sections. Typically, dozens to hundreds of ship blocks are stacked to construct one ship.
Previously, in 2019, J&PE acquired 75% of the equity from HD Hyundai Heavy Industries. The acquisition cost was 100 billion won. After being listed on the KOSDAQ market last year in January, they sold 3,483,000 shares out of 22.2 million shares held, and currently, the equity stake has been reduced to 53.06%.
Currently, the market capitalization of HYUNDAI HYMS in the KOSDAQ market is around 510 billion won. If J&PE calculates the value of its equity based solely on market value, it amounts to approximately 270 billion won. Since J&PE has already recovered 25.4 billion won through previous share sales during the listing process, even selling the management rights equity at market value would yield about three times the multiple.
However, it is projected that the actual profit J&PE will gain will exceed these figures significantly. The shipbuilding industry is experiencing a 'super cycle,' leading to a substantial improvement in conditions, and due to statements made by elected U.S. President Donald Trump, HYUNDAI HYMS is receiving attention as a so-called 'Trump beneficiary stock.'
President Trump noted during an appearance on local U.S. radio on the 6th (local time) that 'we may need to use allies for shipbuilding.' This statement aligns with what he expressed during a phone call with President Yoon Suk Yeol after his election in November, emphasizing that 'the U.S. shipbuilding industry needs Korea's help and cooperation' and that 'he is aware of Korea's construction capacity and that they need to cooperate in maintenance, repair, and service sectors.'
Following these remarks from President Trump, the stock price of HYUNDAI HYMS skyrocketed. On Nov. 7 last year, it hit the trading limit, and by November 11, it rose to 17,770 won. This represents an increase of about 85% compared to the stock price at the end of October.
The market believes that the sale price of HYUNDAI HYMS's management rights could rise to between 600 billion won and 700 billion won. Not only due to the boom in the shipbuilding industry and the 'Trump effect' but also the improved performance of its subsidiary Wonhi Tech, which was acquired in 2021 and bolted on to enhance market dominance, is expected to be a positive factor. Wonhi Tech reportedly increased its sales in the first half of last year to 7 billion won, which is approximately 2.6 times higher than the same period last year, and is said to be approaching an operating profit margin of 30%.