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HD Hyundai Marine Solutions CEO Lee Ki-dong is answering questions at a press conference held at HD Hyundai GRC on the 2nd. Photo by HD Hyundai
"We will solidify our position as the overwhelming global No.1 in the eco-friendly ship repair and retrofit market over the next five years."
Lee Gi-dong, CEO of HD Hyundai Marine Solutions, which is scheduled to go public next month, stated this at a press conference held on the 2nd at HD Hyundai GRC in Seongnam-si, Gyeonggi-do. CEO Lee said, "We will expand our global network to provide solutions such as ship repair and eco-friendly ship retrofitting, and in the SDV (Software Defined Vessels) business, we will develop a marine big data platform business," adding, "In the bunkering business, we plan to continue leading the eco-friendly fuel market by supplying eco-friendly alternative fuels."
HD Hyundai Marine Solutions was established in 2016. It was led by HD Hyundai Vice Chairman Jeong Gi-seon during a time when demand for ship aftermarket (AM) services was increasing. The aftermarket refers to a market created by additional demand arising after companies sell their products. In the ship market, repair, retrofit, and digital transformation are considered aftermarket services.
HD Hyundai Marine Solutions has gradually expanded its business scope beyond existing ship repair services to include eco-friendly retrofitting and digital solutions. Sales and operating profit, which were only 240.3 billion KRW and 54.6 billion KRW respectively in the early days (2017), grew rapidly with a compound annual growth rate (CAGR) of 34.6%. Last year, the company recorded sales of 1.4305 trillion KRW and operating profit of 201.5 billion KRW. In terms of sales alone, this represents a sixfold increase in just six years.
Due to this growth, HD Hyundai Marine Solutions is considered the biggest IPO candidate in the first half of this year. The company submitted its securities registration statement to the Financial Services Commission on the 25th of last month and plans to list on the KOSPI within next month. The market values HD Hyundai Marine Solutions’ market capitalization in the high 3 trillion KRW range. The general subscription will be held on the 25th and 26th of this month.
HD Hyundai Marine Solutions expects to raise approximately 600 to 700 billion KRW through this public offering. The funds will be used for strengthening the global network and research and development for mid- to long-term growth. Through this, the company plans to maintain its dominant position in the ship AM market. Regarding new investment plans after the IPO, CEO Lee said, "Nothing has been finalized yet, but the first investment should be in logistics warehouses," explaining, "Securing inventory at regional hubs is essential to efficiently carry out repairs and retrofits, so continuous investment is necessary."
Behind HD Hyundai Marine Solutions’ growth potential and high profitability is the HD Hyundai Group. The HD Hyundai Group holds a global market share exceeding 15%. In particular, it leads the global market with a 30-40% share in medium to large ship engines. HD Hyundai Marine Solutions holds exclusive rights to after-sales service for ship parts and engines produced by shipyards under HD Hyundai. CEO Lee stated, "The ship AM business is the company’s core business, serving as a 'cash cow' with an EBITDA margin of around 30%."
The eco-friendly ship retrofit business is also expected to see increased demand due to environmental regulations by the International Maritime Organization (IMO). The ship retrofit business involves modifying the ship’s hull structure or installed equipment to improve operational performance, enhance cargo handling efficiency, or change the ship’s operational purpose. Around 2020, the IMO finalized a plan to reduce the sulfur content limit in ship fuel from the previous 3.5% to about 0.5%. This led to a surge in demand for eco-friendly ship retrofits in the market.
An HD Hyundai Marine Solutions official stated, "Since the company officially entered the eco-friendly ship retrofit business in 2017, it has rapidly expanded its business areas to include ballast water treatment systems (BWTS) to prevent marine ecosystem disruption, onshore power supply systems (AMP) for ships, and retrofit of reliquefaction systems to improve the transport efficiency of LNG (liquefied natural gas) carriers."
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