[Company Insight] Hanju Light Metal Strengthens Management Control and Secures Growth Momentum through Listing

[Asia Economy Reporter Hyungsoo Park] Hanju Light Metal, an ultra-lightweight aluminum parts manufacturer, is actively utilizing the funds raised through its KOSDAQ initial public offering (IPO) to produce electric vehicle parts and foster overseas subsidiaries. Along with the new share offering, it is strengthening its management rights through the sale of existing shares.

Hanju Light Metal is offering a total of 6.5 million shares for its IPO, including 4.2 million new shares and 2.3 million existing shares. The expected price range is 2,700 to 3,100 KRW per share, with total proceeds estimated between 17.6 billion and 20.2 billion KRW. Based on the offering price, the market capitalization is expected to be between 52.5 billion and 60.3 billion KRW. From the 12th to the 13th of next month, a two-day demand forecast will be conducted targeting institutional investors to finalize the offering price.

Founded in 1987, Hanju Light Metal supplies lightweight parts based on aluminum casting technology to major domestic and international automakers. It is recognized for its technology in the automotive industry, where weight reduction is essential for improving fuel efficiency, reducing exhaust emissions, and shortening braking distances. The company supplies parts to Hyundai Kia Motors, Renault Korea, GM, Ford, and Nissan.

After the listing, the largest shareholder will change. The current largest shareholder, Eugene Evervest PEF, exercised conversion rights on redeemable convertible preferred shares and convertible bonds held at the end of last year and early this year. Of the 3,819,416 shares held, 2.3 million shares will be sold as existing shares.

Following the offering, Eugene Evervest PEF’s shareholding will decrease to 7.8% (1,519,416 shares) due to the reduction in shares held and new share issuance. The founding family of Hanju Light Metal, Chairman Jeong Samsun and CEO Lee Yongjin, will hold 11.7% (2,269,629 shares) and 6.2% (1.2 million shares) respectively, securing the largest shareholder status for the current management. To stabilize management rights after listing, CEO Lee signed a joint holding agreement with Eugene Evervest PEF and major shareholders. The combined shareholding of shareholders who signed the joint holding agreement is 50.8% after the offering.

CEO Lee Yongjin, son of the late founder Chairman Lee Junghee and current Chairman Jeong Samsun, graduated from the University of Illinois with an MBA before joining Hanju Light Metal. He introduced enterprise resource planning (ERP) and manufacturing execution system (MES) solutions and received commendations from the government. The company established a corporate research institute and focused on R&D, developing patented technologies. It achieved designation as a root technology specialized company, entry into the World Class 300 companies, and designation as a specialized materials, parts, and equipment company.

By computerizing operational systems, securing future growth engines through research and development, and acquiring new orders, CEO Lee demonstrated management capabilities and was appointed CEO last year. The company recorded sales of 189 billion KRW and operating profit of 7.8 billion KRW last year. As of the third quarter this year, cumulative sales reached 175.1 billion KRW with an operating profit of 7.8 billion KRW, achieving results close to last year’s sales of 189 billion KRW and operating profit of 7.1 billion KRW.

Joint lead managers Hyundai Motor Securities and Mirae Asset Securities selected six comparable companies?SeAH Mechanics, Unique, Unitecno, Gooyoung Tech, Motonic, and Seojin Automotive?to determine Hanju Light Metal’s appropriate corporate value. Based on the average price-earnings ratio (PER) of 20.56 times for these six companies, Hanju Light Metal’s corporate value was estimated at 88.9 billion KRW. This applied the annualized net income of 4.3 billion KRW based on the cumulative net income for the third quarter of this year. The per-share value calculated by dividing by the number of listed shares is 4,572 KRW, and a discount rate of 32.20% to 40.95% was applied to propose the expected offering price range.

Excluding the sale of existing shares, Hanju Light Metal will raise at least 11.3 billion KRW, investing 3.5 billion KRW to expand production capacity at its Slovakian subsidiary and 5 billion KRW to increase electric vehicle parts and vehicle lightweighting facilities. It will use 2 billion KRW to repay borrowings to improve its financial structure.

Earlier this year, Hanju Light Metal became the first domestic aluminum parts company to establish a local production base in Slovakia, Europe. It supplies parts for the Kona electric vehicle (EV) of Hyundai Motor’s Czech subsidiary and the Sportage model of Kia’s Slovakian subsidiary. Near Slovakia, there are manufacturing plants of secondary battery companies such as Volkswagen, LG Energy Solution, Samsung SDI, and SK On, providing opportunities for business expansion. Due to the suspension of alloy wheel production, the company is converting facilities to produce knuckles, carriers, and control arms for electric vehicles. It plans to increase sales by expanding production capacity for electric vehicle parts and vehicle lightweighting.

CEO Lee Yongjin of Hanju Light Metal said, "Based on 35 years of accumulated casting technology, Hanju Light Metal has led ultra-lightweighting in the domestic finished car market. After listing, we will strive to secure overseas local production bases and expand our customer base to become the next-generation leader in the lightweighting market."