As the shipbuilding boom lifts the value of shipbuilders and equipment makers, cases are increasing in which sales and investment deals are being delayed. The gap in expectations between investors and corporations over a fair price is the reason.
According to the industry on the 26th, the sale of the largest shareholder's equity in STX Engine, which makes ship power generation engines, has been put on hold for now. UAMCO, the largest shareholder of STX Engine, had planned to sell its entire 64.17% equity stake, but decided to adjust the timing of the sale as STX Engine's share price more than doubled over the past year.
In September last year, STX Engine's market capitalization was in the 760 billion won range, but as of the 25th it surpassed 1.6 trillion won. The value of UAMCO's equity exceeds 1 trillion won, and corporations that had considered an acquisition are said to have conveyed the view that it is "expensive."
STX Engine's price-earnings ratio (PER, share price divided by earnings per share) is 25.11 times, undervalued compared with Hanwha Engine (40.05 times) and HD Hyundai Marine Engine (30.15 times). However, some say the upside is limited because orders are constrained as it is not part of a group, and the sale of the largest shareholder's equity has not been resolved.
In the industry, there is an outlook that if Hanwha Engine acquires STX Engine, the synergy effect would be significant. Hanwha Engine makes low-speed engines used in large vessels, and acquiring STX Engine would allow it to expand into medium-speed engines installed in medium-sized ships and generators. A Hanwha Engine official said it is not considering "acquiring STX Engine or developing medium-speed engines on its own."
HJ Shipbuilding & Construction also saw its share price jump sharply in a short period, scuttling a transaction it had been discussing with financial investors (FIs). Early this year, HJ Shipbuilding & Construction sought to recruit institutional investors to carry out a 200 billion won rights offering. LXP Private Equity and UAMCO were confirmed to participate in the rights offering through a project fund.
The issue price was initially to be set around 8,000 won per share, but as the share price surged into the 30,000-won range within a few months, FIs decided not to participate, judging that additional revenue would be difficult. In the end, the existing largest shareholder, EcoPrime Marine Pacific (49.39%), took part in the rights offering and the deal was wrapped up with it acquiring all new shares at an issue price of 28,456 won.
The UAMCO–KHI consortium (99.58%), the largest shareholder of K Shipbuilding, which is currently undergoing a sale process, is grappling with how to derive an appropriate corporations value. While peer Daehan Shipbuilding's market capitalization is in the 3 trillion won range, K Shipbuilding's corporations value is assessed at below 1 trillion won.
An official in the shipbuilding industry said, "As shipbuilding has rebounded, price tags have risen sharply. With the perception gap between sellers and buyers so wide, it is not easy to conclude a transaction."