This article was published on June 27, 2025, at 4:10 p.m. on the ChosunBiz MoneyMove site.
Daehan Shipbuilding, once considered a headache for the Korea Development Bank, is making a return to the initial public offering (IPO) market as a major player worth trillions. Having faced court receivership, Daehan Shipbuilding is now ramping up its listing procedures on the securities market, boasting a 10% operating profit margin and holding the second-largest share in the semi-large tanker market amid a shipbuilding boom.
Post-listing, its value is estimated at approximately 1.9 trillion won. This is ten times higher than the 200 billion won valuation when KHI acquired Daehan Shipbuilding, the last shipbuilder of Korea Development Bank, three years ago. However, industry evaluations suggest this value is market-friendly.
According to investment banking (IB) industry sources, Daehan Shipbuilding submitted its securities registration statement to the Financial Supervisory Service on the 24th and is actively pursuing the KOSPI listing process. The proposed public offering price ranges from 42,000 won to 50,000 won per share, with the upper limit of the planned public offering amount set at 500 billion won and the estimated market capitalization at 1.9263 trillion won.
Compared to three years ago, its value has skyrocketed nearly tenfold. When Korea Development Bank sold Daehan Shipbuilding to KHI in 2022, the valuation was around 200 billion won. Even in October of last year, when Daehan Shipbuilding issued exchange bonds (EB), its valuation was below 1 trillion won.
The boom in the shipbuilding industry has led to a proposal of over 1.9 trillion won in value. Daehan Shipbuilding faced a potential closure due to a long-term downturn in the shipbuilding industry, but starting from 2021, as the order quantities for new ships increased alongside rising newbuilding prices, the company's performance steadily improved, with sales exceeding 1 trillion won last year.
The operating profit margin also reached an exceptional 14% in the shipbuilding industry. The new owner, KHI, significantly reduced its non-core areas like container ships and focused primarily on tankers. Additionally, the company established a business structure that directly handles processes from raw steel pre-treatment to block production.
Particularly for the tankers that Daehan Shipbuilding specializes in, the increase in U.S. oil production and the demand for replacing aging ships due to environmental regulations have spurred more orders. According to the securities registration statement, Daehan Shipbuilding emerged as the second-largest player in the global Suezmax tanker market last year.
Daehan Shipbuilding was a subsidiary of Daewoo Group, manufacturing medium-sized tankers and petrochemical product carriers. It became a subject of workout during restructuring in the construction and shipbuilding industries in 2009. Afterward, creditors, including the Korea Development Bank, attempted to sell it but faced challenges in finding a buyer, ultimately leading to its transformation into a different company.
Last year, Daehan Shipbuilding recorded sales of 1.0753 trillion won and operating profits of 158.1 billion won. This represents increases of 31.7% and 340.3%, respectively, compared to the previous year. In 2022 alone, sales were at 693.7 billion won and operating profit was a mere 2.3 billion won. In the first quarter of this year, it achieved sales of 307.7 billion won and operating profits of 69.7 billion won.
The market views the valuation of 1.9 trillion won as somewhat market-friendly. KB Securities and NH Investment & Securities, the lead underwriters for Daehan Shipbuilding's listing, adopted the price-to-book ratio (PBR) to assess the company's value, reflecting how much the stock price is multiple times higher than the book value per share (BPS).
Initially, the appropriate market capitalization calculated by multiplying the total equity attributable to the controlling shareholders (514 billion won) by the PBR of comparable companies, then adding the inflow of public funds (336 billion won as a lower estimate), came to 2.6901 trillion won. Subsequently, a range of proposed public offering prices was presented after considering the discount rates of 39.85% to 28.39% per share.
For Daehan Shipbuilding, the price-to-earnings ratio (PER) method proved more advantageous. This is due to the average PER of the comparable companies, including HD Hyundai Heavy Industries, Hanwha Ocean, and Samsung Heavy Industries, being 41.9 times, excluding Samsung Heavy Industries (95.13 times). The appropriate market capitalization is estimated at 8.9583 trillion won, resulting in a per-share valuation of around 220,000 won.
The underwriter noted, 'In the shipbuilding industry, it is essential to leverage large tangible assets to expand real estate utilization, so we deemed the asset-value-based PBR suitable.' They further stated, 'Above all, we were able to derive the desired valuation of around 2 trillion won for Daehan Shipbuilding using the PBR.'
Industry observers suggest a high likelihood of successful IPO due to the current boom in the domestic shipbuilding sector. Notably considering the size of the public offering, participation from foreign institutional investors is essential, and the recent notable buying activity of foreign investors in the domestic stock market is also viewed positively.
However, the recent decline in orders is a cause for concern. Although a solid workload is secured until 2027, there has been a sharp decrease in recent orders. Specifically, Daehan Shipbuilding secured an average of over 10 new orders annually from 2022 to last year, but has only garnered two new orders in the first quarter of this year.
A source within the securities industry remarked, 'Given that the public offering price has been conservatively set, a certain level of demand has been secured. It's true that order volumes have decreased, but the recent market conditions as well as the overall environment remain favorable, suggesting that there shouldn't be major issues in absorbing the public offering volume in the short term.'
Meanwhile, it appears that Korea Development Bank could recover 23.9 billion won when Daehan Shipbuilding lists at a valuation of 1.9 trillion won, as it has retained some equity since acquiring the management rights stake in Daehan Shipbuilding from KHI in 2022. It currently holds around 480,000 shares before the listing.