[THE INVESTOR] Hyundai Heavy Industries' plans for a capital raise will benefit it, said Korea Investment and Securities on Dec. 27, lowering the target price to 160,000 won (US$148.75) from 220,000 won and maintaining a “buy” recommendation.
Its 1.3 trillion won capital raise is a preemptive measure before financial institutions begin to add pressure, explained analyst Lee Gyeong-ja.
Although the shipbuilder, burdened by fixed costs, is likely to suffer an operating loss, the capital raise is positive, according to the analyst.
Its net borrowings on a standalone basis is 1.4 trillion won, and factoring in the cost from next year’s delayed negotiations with workforce, its cash deficiency will be 2.1 trillion won, estimated Lee. However, the capital raise and cash inflow from selling overseas operations will enable the company to be free of debt, she said.
By Hwang You-mee (firstname.lastname@example.org)