대한조선주식회사

 

DHshipbuilding Rides the Momentum of Financial Turnaround,

Setting Sails for IPO

 

 

 

DHshipbuilding, a global leader in midsize and large oil tankers, is gearing up to launch its initial public offering (IPO), leveraging strong financial performance. The company aims to complete the IPO by the second half of 2025 and is currently in the process of selecting underwriters.

 

According to the investment banking (IB) industry, DHshipbuilding is in active discussions with several leading securities firms that have expertise in shipbuilding IPOs.

 

The selection of lead underwriters and the appointment of an external auditor are expected to be finalized by the end of September.

 

Analysts predict that DHshipbuilding's IPO could become one of the biggest deals of 2025, given the company’s impressive financial turnaround and the resilience of the shipbuilding sector.

 

Since last year, shipbuilding stocks have surged by nearly 50%, reflecting the industry’s boom. DHshipbuilding has reported its best financial performance in company history, further accelerating this momentum.

 

The company’s financial rebound began in September 2022, following a strategic investment by the KHI Group. Since then, DHshipbuilding has focused on high-value vessel orders and aggressive marketing, which led to a significant rise in tanker prices.

 

The Aframax and Suezmax tankers—the company’s flagship products—have seen their prices surge by 40-50% from 2022 through the first half of 2024, contributing greatly to the company’s revenue and operating profit growth.

 

For the first half of 2024, DHshipbuilding reported revenue of 460 billion KRW and an operating margin of 12.5%—a remarkable achievement compared to the industry average of 7-10%. The company had only recorded an operating profit of 3.3 billion KRW in 2022, underscoring the rapid transformation in its financial health within just two years.

 

An IB official noted, "DHshipbuilding can build up to 12 ships per year using a single dock, and it has the infrastructure to produce ship blocks in-house, without outsourcing. This capability allows the company to effectively manage costs and shield itself from inflation, unlike larger shipbuilders, resulting in faster profitability and higher margins."

 

The KHI Group Chairman, Kim Kwang-ho, played a pivotal role in the transformation by eliminating inefficiencies and personally inspecting vessels under construction multiple times a day. His hands-on management style revitalized the company’s operations, and since September 2022, he has also taken on the role of managing director to oversee day-to-day management.

 

DHshipbuilding's future looks bright. As of August 2024, the company has secured an order backlog of 30 vessels, valued at 2.6 billion USD, providing work for the next three years. The company expects continued improvement in performance through 2027.

 

The company also achieved notable sales in the first half of 2024, including 13 new Suezmax tankers with eco-friendly features and three high-value shuttle tankers, demonstrating its ability to secure quality contracts despite competition from low-cost Chinese shipbuilders.

 

However, the issuance of Refund Guarantees (RG)—a crucial element for new orders—remains a challenge for many shipbuilders. For over a decade, due to sluggish market conditions and restructuring, only state-run banks such as Korea Development Bank have issued RGs, while commercial banks have been reluctant.

 

Fortunately, the government has taken action. In June 2024, the Ministry of Trade, Industry, and Energy, along with the Financial Services Commission, announced an expansion of RG support through the “K-Ship Export Financing Support Agreement.”

 

Under the new scheme, both regional and commercial banks will issue RGs to midsize shipbuilders, backed by the Korea Trade Insurance Corporation’s back guarantees. As part of this initiative, 2.6 billion USD in financing has been allocated to support nine vessels, with DHshipbuilding being the first to receive 170 million USD in RG support for six vessels.

 

Given the company’s strong performance amid the shipbuilding industry boom, DHshipbuilding’s IPO is expected to draw significant attention not only within the shipbuilding industry but also in the broader IPO market.