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EUR 97.11
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Hyundai Engineering is an engineering firm that covers the entire life-cycle, from procurement, development, maintenance post-completion of the building/project. As per Korea Construction Association in 2021, it ranks 6th position, with a construction capacity of KRW8.5 tn.
Whilst the firm has a relatively high concentration of international orders in its backlog, 40% in 9M21, it has been on the down trend since 2016. At the asking valuation, the firm is valued at more than twice its domestic peers’ on the EV/EBITDA front, which in our view, isn’t justified. Based on our assumptions, if the firm were to trade closer to its domestic peers on the FY23E EV/EBITDA front, it represents a 35.5-56.2% downside potential.
In this note, we discuss peer comparison, our assumptions and valuation against domestic and international peers.
We have looked at the deal earlier:
Hyundai Engineering Pre-IPO - Order Backlog Aids Visibility However, Margins Have Been Fluctuating
Hyundai Engineering Pre-IPO
Hyundai Engineering is looking to raise up to US$1bn in its upcoming Korea IPO.Hyundai Engineering is an engineering firm that covers the entire life-cycle, from procurement, development, maintenance post-completion of the building/project. As per Korea Construction Association in 2021, it ranks 6th position, with a construction capacity of KRW8.5 tn.
Whilst the firm has a relatively high concentration of international orders in its backlog, 40% in 9M21, it has been on the down trend since 2016. At the asking valuation, the firm is valued at more than twice its domestic peers’ on the EV/EBITDA front, which in our view, isn’t justified. Based on our assumptions, if the firm were to trade closer to its domestic peers on the FY23E EV/EBITDA front, it represents a 35.5-56.2% downside potential.
In this note, we discuss peer comparison, our assumptions and valuation against domestic and international peers.
We have looked at the deal earlier:
Hyundai Engineering Pre-IPO - Order Backlog Aids Visibility However, Margins Have Been Fluctuating
Underlying
Hyundai Engineering
Provider
Aequitas Research
Aequitas Research is a leading ECM research firm with a focus on IPOs and placements/follow-on offerings across the Asia Pacific with deal size of over USD100m.
Since 2015, we have covered 400+ IPOs and 450+ placements with a hit rate of 73% and 65%, respectively. We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic analysis.
Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis. We also provide a more quant driven analysis on placement/follow-on offerings.
Markets that we cover include:
Hong Kong,
China ADRs,
India,
Japan,
Australia, and
ASEAN.
Hong Kong,
China ADRs,
India,
Japan,
Australia, and
ASEAN.
Clarence Chu
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