A Comparison Between Ecopro Materials & HD Hyundai Marine Solution Post IPO

• In this insight, we make comparisons between EcoPro Materials (450080 KS) and HD Hyundai Marine Solution (443060 KS) post their IPOs

• Ecopro Materials' share price is likely to face continued weakness, especially with the potential for a major block deal sale by BRV Capital and end of the lock up period.

• We believe that HD Hyundai Marine Solution's share price has surged above its intrinsic value. More insiders are likely to start selling HD Hyundai Marine Solution in the coming months.

In this insight, we make comparisons between EcoPro Materials (450080 KS) and HD Hyundai Marine Solution (443060 KS) post their IPOs. There are several notable similarities that are worth pointing out which could better pinpoint the key share price inflection points.

Currently, HD Hyundai Marine Solution has a market cap of 8.6 trillion won (49th largest stock in KOSPI) and Ecopro Materials has a market cap of 6.7 trillion won (60th largest stock in KOSPI).

Ecopro Materials Share Price Performance Post IPO & BRV Capital Could Sell Once Lock-up Period Ends

Ecopro Materials completed its IPO on 17 November 2023 at an IPO price of 36,200 won. Its share price skyrocketed to as high as 244,000 won 11 January 2024 (up 574%). Since then, its share price has declined to 97,100 won, which is 60% lower than its all time highs in January but still 168% higher than the IPO price.

Ecopro Materials (End of Lockup Period for 33% of Its Shares) - According to the Korea Securities Depository, 22.48 million shares of Ecopro Materials (32.6% of outstanding shares) could be sold starting 17 May (end of lockup period). In particular, BRV Capital (2nd largest shareholder of Ecopro Materials) could sell a big chunk of its shares once the lock-up period ends.

BRV Capital currently owns a 24.7% stake in Ecopro Materials. Given the large amount owned by BRV Capital, if it tries to sell a portion of its shares, it is likely to involve a hefty block deal discount which could further add to the worsening sentiment on the Ecopro Materials.

Furthermore, given such a large stake owned by BRV Capital, it is unlikely for the private equity firm to sell all its stake in Ecopro Materials at once. This is likely to add to the potential overhang concerns on Ecopro Materials. The market has started to take this into consideration and this is one of the major reasons why Ecopro Materials's shares are down nearly 60% since its peak in early January.