Who Will Win the Ssangyong Motor Acquisition Battle? "Ants' Eyes on KG Chemical"

[Asia Economy Reporter Lee Seon-ae] A survey revealed that many individual investors expect KG Chemical to win the acquisition battle for Ssangyong Motor. Additionally, amid news of a boom in domestic shipbuilding orders, there is notable enthusiasm particularly for Samsung Heavy Industries.

On the 21st, Dunamu conducted a survey titled “Ssangyong Motor Acquisition Battle... Who Will Win?” on the Securities Plus application during the fourth week of April. Eight out of ten respondents (79.9%) chose KG Chemical. Ssangbangwool received 20.1% support. A total of 4,399 people participated in this survey.

Following the Seoul Bankruptcy Court’s approval on the 14th to reinitiate the pre-approval M&A process and select a lead sales agent for Ssangyong Motor, investor attention has focused on KG Chemical and Ssangbangwool Group, both of which expressed intentions to participate in the acquisition. In response to an inquiry about participation rumors, KG Chemical announced on the 18th that “KG Group formed the KG Consortium during the review process for acquiring Ssangyong Motor, submitted a preliminary letter of intent to the lead sales agent on the 12th through its affiliate KG Steel Holdings as the representative, and submitted the official letter of intent on the 18th.”

Ssangbangwool Group participated in the acquisition by forming a consortium with KH Group, centered around its special-purpose vehicle manufacturing affiliate, Kwanglim. On the 18th, Kwanglim disclosed that it submitted a letter of intent to the lead sales agent to participate in a limited competitive bidding using the stalking-horse method for the Ssangyong Motor M&A. Both the KG Consortium and the Kwanglim Consortium stated that no finalized details exist yet regarding the acquisition or the acquiring party and that they will re-disclose information within one month or once specifics are confirmed.

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Meanwhile, in a survey titled “World’s No.1 in Orders in Q1... Will Shipbuilding Stocks Continue to Rise?” with 2,579 participants, 77% chose ‘Samsung Heavy Industries’ and 23% chose ‘Hyundai Mipo Dockyard.’ According to the securities industry, global new ship orders in the first quarter totaled 259 vessels, a 51.65% decrease compared to 535 vessels in the same period last year. However, Korean shipbuilders’ market share showed an upward trend. In Q1 2022, Korean shipbuilders’ global market share was 49.7%, up 12.5% from the previous year’s same period. The large volume of LNG carrier orders was cited as the main reason for the increase in market share. As domestic shipbuilders posted strong order results, expectations for shipbuilding-related stocks such as Samsung Heavy Industries and Hyundai Mipo Dockyard have also been rising.

Samsung Heavy Industries is one of the domestic ‘Big 3’ shipbuilders specializing in LNG carriers, LNG FPSOs, and container ships. On the 28th of last month, it announced that it had secured 13 vessels worth $2 billion so far this year, achieving 23% of its $8.8 billion annual target. Hyundai Mipo Dockyard is a shipbuilder focusing on special-purpose and small-to-medium-sized vessels, with petrochemical carriers (PC vessels) as its main ship type. In March, it successfully delivered the world’s largest LNG bunkering vessel, earning recognition for its technological capabilities. Amid continuous news of large-scale orders for domestic shipbuilders, attention is focused on whether shipbuilding stocks will continue to soar following the order boom.