SM Line to price IPO next week to raise up to $722 mn on Kosdaq

[Photo by SM Line Corp.]

South Korea’s container carrier SM Line Corp. aims to raise up to 846.1 billion won ($722.2 million) from its planned initial public offering in the country’s secondary Kosdaq market in November, making the first shipping stock entry in 14 years.

The sea carrier enjoying a shipping boon plans to offer 33,844,220 shares - half in existing shares - in a desired band of 18,000 won to 25,000 won. Pricing will be determined in book-building session on Nov. 1-2, according to industry sources on Wednesday.

When priced at the top end of 25,000 won, the company can raise maximum 846.1 billion won and command a market cap of 2.12 trillion won. NH Investment & Securities is the lead underwriter for the IPO.

Public subscription will be available on Nov. 4-5 via NH Investment & Securities, KB Securities, HI Investment & Securities, Yuanta Securities Korea and Hana Financial Investment.

SM Group affiliates – Samla Midas Co., TK Chemical Corp. and Samla Co. will likely earn about 420 billion won through the offering of their shares.

The IPO proceeds from new share sales will be used to invest in vessels, secure more container boxes and install eco-friendly facilities.

SM Line, founded in 1991 as cargo transportation services provider, acquired liquidated assets of Korea’s former No. 1 and the world’s once seventh largest container carrier Hanjin Shipping Co. that went bankrupt in 2016. It took over Hanjin’s U.S. business in 2016 and now operates four routes in Americas and nine in Asia with 18 ships in its fleet. It plans to expand routes to east of the United States.

Three years ago, SM Line merged with Woobang Engineering & Construction to dive into the housing business. Marine shipping and construction businesses took up 97 percent and 3 percent of its total revenue, respectively, as of the first six months of the year.

Analysts are closely watching the market debut of a shipping company in Korea in 14 years as the number of IPO aspirants is growing fast in related industries on the back of a recovery in shipping demand.

SM Line in the half of the year reported an operating profit of 308.9 billion won, already exceeding the full-year profit of last year, with sales of 707.6 billion won nearing 70 percent of last year’s full-year numbers. Its revenue has expanded by an average 40 percent per year since 2016.

“Container freight rates have extended the record-breaking streak, raising expectations that the rate hike would continue into next year. As long as such trend keeps unchanged, SM Line is expected to continue current earnings growth,” said a market expert.

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