HD Hyundai: Updated NAV Analysis

• According to our NAV analysis, it suggests a base case valuation of 122,473 won per share for HD Hyundai, representing a 50% upside from current levels.

• The combined value of HD Korea Shipbuilding & Offshore Engineering, HD Hyundai Electric & Energy, and HD Hyundai Marine Solution is 11.4 trillion won.

• We estimate HD Hyundai's 73.85% stake in Hyundai Oilbank to be 7.0 trillion won. We also applied a 5x OP of its core business and a 50% holdco discount.

Photo by famingjia inventor on Unsplash

HD Hyundai Sum-of-the Parts Valuation Analysis

According to our NAV analysis, it suggests a base case valuation of 122,473 won per share for HD Hyundai, representing a 50% upside from current levels.To value HD Hyundai, we used the current market values of its investments in public companies including HD Korea Shipbuilding & Offshore Engineering (009540 KS), HD Hyundai Electric & Energy (267260 KS), and HD Hyundai Marine Solution (443060 KS). The combined value of these investments is 11.4 trillion won.

For HD Hyundai's investment in Hyundai Oilbank, we used the private market value of Aramco's investment Hyundai Oilbank. We estimate HD Hyundai's 73.85% stake in Hyundai Oilbank to be 7.0 trillion won. We also applied a 5x OP of its core business, 2.7 trillion won in net debt, and a 50% holdco discount.

If the company is able to display higher returns on capital (including share buybacks/cancellations and dividends), then investors would be willing to attach lower valuation discount on the company, reducing the overall holding company discount.