S&SYS IPO Preview

• S&SYS is getting ready to complete its IPO in KOSDAQ in August. S&SYS is a shipbuilding equipment integrated solution company.

• The company plans to offer 1.9 million shares in this public offering. The IPO price range is from 27,000 won to 30,000 won.

• To value S&SYS, the bankers used Sejin Heavy Industries Co Ltd (075580 KS), Halla IMS, HD Hyundai Marine Solution (443060 KS), and Ksp Co Ltd (073010 KS) as comps.

Source: Company data

S&SYS is getting ready to complete its IPO in KOSDAQ in August. S&SYS is a shipbuilding equipment integrated solution company. S&SYS was established in June 2017 as a spun-off company from Samsung Heavy Industries (010140 KS).

The company plans to offer 1.9 million shares in this public offering. The IPO price range is from 27,000 won to 30,000 won. At these prices, the IPO offering amount is 51.3 billion won to 57 billion won. The company plans to use the IPO proceeds to expand production capacity and R&D capabilities. The book building for the institutional investors lasts from 28 July to 1 August.

Company Background

It is a specialized shipbuilding equipment company that develops and supplies high-function ship systems that combine electrical, electronic, and mechanical technologies. Its main business areas include power solutions, eco solutions, navigation control solutions, and maintenance, repair, and overhaul (MRO) solutions.

In particular, in the field of ballast water management systems (BWMS), it has completed certifications from the International Maritime Organization (IMO), and has secured major domestic shipbuilders such as Samsung Heavy Industries and Hanwha Ocean (042660 KS) as well as major Japanese and Chinese shipyards as clients.

Core products - The company's core products include power solutions, eco solutions, operational control systems, and MRO (maintenance, repair, & operations) in the shipbuilding market. The company provides total solution expertise that can perform the entire process from basic design to maintenance in the equipment value chain in the shipbuilding and marine industries.

High barriers to entry - Due to the nature of ships that require long-term operation (average ship age of 20 years or more), shipbuilding equipment companies must ensure product reliability and quality and have long-term supply capabilities. In addition, the main shipbuilding equipment market has very high barriers to entry, such as the need to obtain certification through strict regulations and environmental tests from the IMO (International Maritime Organization) and various classification societies.

Global sales and A/S network - In addition, the shipbuilding equipment market must have a global sales network and A/S network targeting various ship owners and shipyards around the world, and competitiveness based on long-term accumulated know-how and performance required for order-made production/delivery according to various customers is required.

Certification requirements - S&SYS has certifications from major classification societies and IMO (International Maritime Organization), and has a global sales network and A/S network in each continent and major ports.

Based on this, through core competencies accumulated for approximately 29 years from the mechanical engineering team of Samsung Heavy Industries in 1996 to the present after its spin-off in June 2017, the company has a construction performance record of 2,258 power solutions, 1,020 eco-solutions, and 2,973 operation control solutions in the global shipbuilding market.

Power solution switchboards - Power solution switchboards are key equipment that efficiently distribute and protect electricity and are used in various environments such as power plants, industrial facilities, ships, and marine plants. They safely supply electricity generated from generators to each load and play a role in protecting systems, equipment, and people in the event of electrical accidents such as overload, short circuit, and current leakage.

In addition, they perform an important function of maintaining power quality and maximizing energy efficiency by monitoring/controlling voltage and current. The company supplies switchboards specialized in ships and marine plants, and provides optimized solutions for the power systems of various ships such as LNG carriers, FPSOs, container ships, and offshore drilling ships.

Water management - IMO Ballast Water Management Convention (BWM Convention) is an international convention adopted in 2004. It came into effect on September 8, 2017 as an international measure to prevent disturbance of the marine ecosystem caused by ballast water injection and discharge. Accordingly, all ships sailing in international waters must install a ballast water management system (BWMS).

As a company that provides innovative technologies for the protection of the marine ecosystem and the sustainable shipping industry, the company has an outstanding technology and experience in the BWMS field. It provides BWMS solutions that meet the IMO's Ballast Water Management Convention regulations, thereby preserving the marine ecosystem and fulfilling the environmental responsibility of ships.

Use of eco-friendly fuels - In addition, as the IMO's environmental regulations have been strengthened recently, the use of eco-friendly fuels is increasingly being emphasized. Accordingly, eco-friendly ships using alternative fuels such as LNG, methanol, and ammonia are increasing, and the demand for fuel supply systems for these is also skyrocketing. The dual fuel supply system (FGSS and LFSS) is a key component of alternative fuel-based propulsion systems.

The company possesses the core technology of the dual fuel supply system, and design, manufacture, and supply the FGSS (Fuel Gas Supply System), an LNG fuel propulsion system, and the LFSS (Low Flashpoint Fuel Supply System), a methanol fuel propulsion system.