"How is the Daehan Shipbuilding public offering subscription?" "Don't buy it."
This is a post and comments on the anonymous workplace application Blind. Those who verified their employment at Daehan Shipbuilding discouraged public offering subscriptions or reacted critically towards the company.
Employee reactions during the subscription process were cold. While the public offering aimed at institutional and general investors conducted by the mid-sized shipbuilder Daehan Shipbuilding was successful ahead of its KOSPI market listing, a large number of unsubscribed shares emerged in the employee stock ownership plan.
The market points out that the reason employees turned their backs on the company's stocks was due to the high number of allotted shares per person, but the underlying circumstances appear somewhat complex. Given that Daehan Shipbuilding has experienced prolonged turmoil, there seems to be a wariness about guaranteeing the next year.
According to the financial investment and shipbuilding industries on the 28th, Daehan Shipbuilding employees only subscribed to 65,385 shares (3.3%) of the allotted 2 million shares in the employee stock ownership plan. This was very low compared to companies that previously entered the KOSPI market. The subscription rates for other employee stock ownership plans were 95.3% for CK Solution, 81.6% for LG CNS, and 71.5% for Seoul Guarantee Insurance.
The allotment was relatively large. Considering that Daehan Shipbuilding has 531 full-time employees, about 3,766 shares were allocated per person. An investment of about 188 million won is needed based on the public offering price of 50,000 won. This contrasts sharply with the approximately 22.5 million won level for employees of CK Solution, which had a high employee stock ownership subscription rate.
Moreover, based on the salaries from January to May this year, the estimated annual salary is 79.2 million won. Given that the allotment exceeded two years of salary, it is not easy to invest without loans. Daehan Shipbuilding did not provide support for loan interest related to the employee stock ownership subscription.
However, this is not the main reason. Since only a portion of the allotted shares can be subscribed to, it is believed that the burden of the mandatory holding period until one year post-listing was more significant. Although 56.9% of institutional investors participating in Daehan Shipbuilding's demand forecasting assured their commitment to holding stocks, they can also sell their shares after six months.
There were opinions that while one can sell shares if they resign before the mandatory holding period, considering the location of Daehan Shipbuilding's main business sites makes it difficult for employees to have choices. Daehan Shipbuilding operates a shipyard in Haenam, Jeollanam-do, and a factory in Yeongam, Jeollanam-do that manufactures ship blocks.
An official from a large shipbuilding company said, "It's not easy to change jobs even in areas with many jobs like the metropolitan area, so it's challenging for employees in rural areas to choose to resign to sell their employee shares."
Above all, it is believed that the long-term struggles of the company followed by recent rebounds have a significant impact. Daehan Shipbuilding entered a workout following the structural adjustments in the shipbuilding industry in the year after the global financial crisis in 2008. In 2011, the company entered into a consignment management contract with Daewoo Shipbuilding & Marine Engineering (now Hanwha Ocean) and began restructuring, yet difficulties persisted, leading to their corporate rehabilitation procedures in 2014. Since then, they have been under the supervision of their main creditor, Korea Development Bank.
Daehan Shipbuilding welcomed KHI as its new owner in 2022. Coinciding with a recovery in the shipbuilding market, it achieved an operating profit in that same year, and has continued to report profits into the first quarter of this year. Considering that the average tenure of Daehan Shipbuilding employees is nine years, they struggled longer than the recent three years of recovery. Because the painful times were lengthy, it was difficult to rashly (?) buy employee shares.
If Daehan Shipbuilding's public offering price had been set six months ago, it might have only reached half that level. Daehan Shipbuilding based the desired public offering price range (band) on the price-to-book ratio (PBR) of HD Hyundai Heavy Industries, Hanwha Ocean, Samsung Heavy Industries, and HD Hyundai Mipo. They utilized net worth values at the end of the first quarter this year and stock prices from May to June.
The PBR used to determine Daehan Shipbuilding's public offering price was 6.35 times for HD Hyundai Heavy Industries, 4.8 times for Hanwha Ocean, 3.6 times for Samsung Heavy Industries, and 3.57 times for HD Hyundai Mipo. Compared to the third quarter last year, six months ago, the ratios would be lower, with 3 times for HD Hyundai Heavy Industries, 2.2 times for Hanwha Ocean, 1.9 times for Samsung Heavy Industries, and 2 times for HD Hyundai Mipo.
Whether Daehan Shipbuilding employees made the right choice, or if it was a false concern, will likely be determined by the stock price one year from now. Daehan Shipbuilding's stock will be traded on the KOSPI market starting August 1.