Traffic passes in front of STX Pan Ocean Co Ltd's headquarters in Seoul, South Korea. STX Group controls the shipping line STX Pan Ocean Co Ltd, which is listed in Singapore and South Korea. SeongJoon Cho / Bloomberg

SINGAPORE - STX Group may become the first South Korean company to list in Hong Kong as it considers plans for selling shares in the city of its Chinese shipyard.

The group is also considering listing in Singapore, STX Group Chairman Kang Duk Soo said at event on April 30 in Dalian, northeastern China, according to a company transcript. He didn't comment on the timing of the initial public offering.

The Dalian yard will likely deliver 31 vessels this year, compared with 22 last year, Kang said, as it ramps up production following its first ship handover in 2009. STX, which listed an offshore arm in Singapore last year, has said it may also hold IPOs for units making cruise ships and marine engines to help fund expansion as it works to quadruple sales by 2020.

"The timing for the IPO is good," said Lee Sokje, an analyst at Mirae Asset Securities Co in Seoul. "The shipyard could start making a profit as early as the second half."

The Dalian yard, which operates the world's biggest dry dock, had an order backlog of 4.52 million deadweight tons, or 77 vessels, at the end of March, according to London-based Clarkson Plc, the world's largest shipbroker.

"We are working to improve our core strengths as well as boosting the Dalian shipyard's profitability and sales before seeking an IPO," Kang said. "We believe there will be a significant change in profitability this year."

New contract

The facility mainly makes ships that can move commodities, containers and drill for oil. In August, it won a $250 million contract to build a drilling ship from Noble Drilling Holding LLC as STX moves into a market dominated by Hyundai Heavy Industries Co, Samsung Heavy Industries Co and Daewoo Shipbuilding & Marine Engineering Co. Its rivals, the world's three largest shipyards, are all based in South Korea.

The Dalian yard is 52 percent owned by Jinhae, South Korea-based STX Offshore & Shipbuilding Co, the world's fourth-largest shipyard. Affiliate STX Corp holds 28 percent and STX Heavy Industries Co owns the rest.

STX Offshore gained as much as 3.2 percent to 32,600 won ($30.60) and traded at 32,350 won as of 12:48 pm in Seoul. STX Corp climbed as much as 3 percent to 27,500 won.

STX OSV Holdings Ltd., the world's biggest maker of oil-rig support vessels, raised S$257.3 million ($210 million) in a Singapore IPO in November after selling shares at the bottom end of the price range. The stock has risen 42 percent from the 79 Singapore cent sale price to close at S$1.12 on April 29. Singapore's market is closed on Monday for a holiday.

Companies have raised HK$19.9 billion ($2.6 billion) in 15 Hong Kong IPOs this year, led by China Hongqiao Group Ltd's HK$6.4 billion sale in March, according to data compiled by Bloomberg. China Rongsheng Heavy Industries Group Holdings Ltd, the largest Chinese shipbuilder outside state control, raised HK$14 billion in an IPO in the city in November.

STX Group, which plans to boost sales to 120 trillion won by 2020, is also considering holding IPOs for STX Europe, its cruise ship unit, and for STX Heavy, the world's second-biggest maker of marine engines, the group's Vice-Chairman Lee Jong Chul said in November.

Reuters

(China Daily 05/03/2011 page17)