Hyundai Engineering Misses 'Deadline' Again, "Another Big Fish Gone"... IPO Enters Harsh Winter Period

[Asia Economy Reporter Lee Seon-ae] Another major IPO has disappeared. Hyundai Engineering, which had raised expectations as a major IPO candidate in this year's public offering market, has effectively given up on its IPO entirely. The market anticipates that the IPO market downturn will continue, resulting in poorer performance in all aspects such as the number of companies going public and the amount raised compared to last year.

According to the Korea Exchange on the 28th, the approval for Hyundai Engineering's preliminary listing examination, which passed on December 6 last year, will expire on June 6. Since the company withdrew its offering on January 28, it must resubmit the registration statement to restart the listing process this year. Less than two months remain. Mechanically, it takes at least 45 days from submitting the securities registration statement to subscription, allocation, and issuance. Ultimately, Hyundai Engineering has not submitted a new securities registration statement by this date, which is effectively a declaration of giving up on the IPO this year.

An investment banking industry insider said, "If Hyundai Engineering had planned an IPO this year, they should have submitted the securities registration statement by the first week of April. Since they did not submit it, Hyundai Engineering's listing must start over from the beginning, and the earliest it could happen is next year, so it will not occur this year."

The market believes Hyundai Engineering will not rush to list hastily. When the listing was pursued in January, controversy arose because a large portion of Hyundai Engineering shares held by Chairman Chung Eui-sun were included in the sale of existing shares. Hyundai Engineering is majority-owned by Hyundai Construction with a 38.62% stake, while Hyundai Motor Group Chairman Chung Eui-sun holds 11.72%, and Hyundai Glovis holds 11.67%. Honorary Chairman Chung Mong-koo of Hyundai Motor Group also holds 4.68%. The company offered a total of 16 million shares in the IPO, of which 75%, or 12 million shares, were existing shares sold by Chairman Chung Mong-koo and Chairman Chung Eui-sun. This has led to ongoing analysis that the market capitalization must be set high to increase the value of the owners' shares.

An IB industry insider added, "Given the recent challenging stock market environment and the fact that Hyundai Engineering is not short of funds, it seems unlikely they will push for a listing recklessly, so the situation will need to be observed next year as well." Hyundai Engineering's official stance is that no decisions have been made regarding the listing.

The IPO market is expected to continue shrinking. Recently, SK Shieldus and One Store attracted attention by submitting securities registration statements, but concerns have been raised about their high offering prices relative to corporate value and the high proportion of existing share sales, signaling a tense atmosphere. Shieldus and One Store will conduct institutional demand forecasts on the 3rd and 9th of next month, respectively. Both are struggling with controversies over overvaluation. Shieldus's expected market capitalization ranges from 2.8 trillion to 3.5 trillion KRW, exceeding the market cap of S-1, the industry's current leader, at 2.6 trillion KRW. One Store, which operates an app store business, faces skepticism due to its limitation to the domestic market. Yuanta Securities researcher Choi Nam-gon pointed out, "SK Shieldus has advantages such as higher margins and cybersecurity compared to S-1, but it lags behind S-1 in sales and profit scale, which is negative. Unlike Google's Play Market and Apple's App Store, One Store is a local-limited market, and how it can overcome this is questionable."

The high proportion of existing share sales is also controversial. Existing share sales are seen as a means for current shareholders to exit. Of SK Shieldus's 27,102,084 shares offered, 46.67% are existing share sales. One Store's existing share sales account for 29.05% of its total 6.66 million shares.

Meanwhile, warning signs for the IPO market have been heard since the first quarter of this year. Twenty-seven companies newly listed in the first quarter, down five from 32 companies in the same period last year. Moreover, withdrawals of listings, including Hyundai Engineering, Daemyung Energy, and Voronoi, have surged. The poor market environment has led to low interest, making it difficult to assess corporate value at the desired level, and regardless of popularity, post-listing differentiation has intensified. In fact, more than half of the 107 companies listed since last year have recorded poor returns. Yuanta Securities researcher Cho Chang-min analyzed, "76 stocks have recorded returns below the market index, and among 16 companies with a market capitalization exceeding 1 trillion KRW, only three have outperformed the index."