This year, it is expected that securing new contracts at a level similar to previous years is entirely possible.
Wang Sam-dong, CEO of Daehan Shipbuilding, attended a news conference on the initial public offering (IPO) held on the 17th at the Fairmont Hotel in Yeouido, Seoul, and noted, "There are concerns in the market about the decrease in order backlog, but orders have only been delayed due to the U.S.-China conflict, and demand remains unchanged."
Daehan Shipbuilding, once considered a headache for the Korea Development Bank, has returned to the IPO market as a major player, benefiting from the booming shipbuilding industry. It became a workout candidate during the restructuring process of the construction and shipbuilding industries in 2009, and after being managed by the Korea Development Bank, it has been nearly three years since KHI took new ownership in 2022.
Based on the upper end of the hoped-for offering price range (42,000 won to 50,000 won), the size of the public offering is set at 500 billion won, with a market capitalization of 1.9263 trillion won post-listing. KB Securities and NH Investment & Securities are serving as the leading underwriters for the listing. After finalizing the offering price next week, they plan to proceed with the public subscription and finalize the listing in early August.
Wang noted, "The increase in new ship orders starting in 2021 and the rise in ship new building prices have led to last year's sales exceeding 1 trillion won," adding, "In particular, we focused on crude oil tankers, moving away from less core types such as bulk carriers, which allowed for an operating profit margin exceeding 14% last year."
However, the recent decline in orders has been identified as a concern. While they have secured work until 2027, there has been a sharp drop in recent orders. Daehan Shipbuilding has averaged 10 new contracts per year from 2022 to last year, but has only secured 2 new orders by the first quarter this year.
Wang noted, "Last year's second half saw a significant expansion among Chinese shipbuilding companies, coupled with a worsening U.S.-China conflict, which led to shipowners being cautious about placing orders until the first half of this year," yet he expressed optimism that, "With the United States imposing sanction measures against Chinese vessels, orders are expected to increase in the second half of this year."
The Donald Trump administration, which is engaged in a 'trade war' with China, has decided to hit China's shipbuilding and shipping industries hard. The Office of the United States Trade Representative (USTR) plans to impose port entry fees on not only Chinese shipping companies but also on shipping companies using Chinese vessels starting in October this year.
Wang emphasized, "It may seem that work is decreasing, but the fundamentals of the shipbuilding industry are strong," adding, "Half of the global crude oil carriers are over 15 years old, and due to the carbon reduction roadmap set by the International Maritime Organization (IMO), there will inevitably be an increase in new ship orders in the long term."
He further stated, "Overseas shipping companies view ships as key assets that need to be operated for more than 20 years, and Daehan Shipbuilding's vessels feature lower fuel consumption and require less maintenance due to their unique technology," asserting, "In the first quarter of this year alone, we generated 307.5 billion won in revenue and 69.8 billion won in operating profit."
Daehan Shipbuilding plans to use the IPO proceeds to enhance its shipbuilding competitiveness and establish a foundation for sustainable growth. The company aims to utilize the proceeds immediately for establishing a research and development (R&D) center and to advance eco-friendly and new technology. It also decided to strategically invest in improving profitability through production automation.
Wang said, "We plan to begin constructing shuttle tankers, which transport crude oil from offshore drilling sites to ports, next year," noting, "Shuttle tankers require special equipment such as dynamic positioning systems, making their prices at least 50% higher than those of standard tankers, and profitability is expected to improve further."
He continued, "We are managing our operations with a focus on profitability rather than sales expansion," emphasizing, "I will strengthen our market position through selective orders focused on profitability, including improving fuel efficiency and shipowner-friendly specifications in our main medium and large vessels, while widening the technical gap with Chinese shipyards."