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(LEAD) Doosan Engine ends 33.2 pct higher on stock market debut
SEOUL, Jan. 4 (Yonhap) -- Doosan Engine Co., the world's second-largest maker of marine engines, bolted up 33.2 percent on its first stock trading day Tuesday thanks to a strong rebound in the shipmaking industry, analysts said.

   Shares of Doosan Engine closed at 25,700 won (US$22.9) on the Seoul main bourse, skyrocketing from its initial public offering price of 19,300 won.

   Doosan Engine, in which heavy equipment manufacturer Doosan Heavy Industries & Construction Co. owns a 42.7 percent stake, raised 202.7 billion won last week by selling 10.5 million newly issued and existing shares to the public.

   Shipmaking giant Samsung Heavy Industries Co. is the second-biggest shareholder with a 14.1 percent interest while smaller shipyard Daewoo Shipbuilding & Marine Engineering Co. holds 8.1 percent.

   Analysts said a strong recovery of the global shipbuilding sector, backed by solid world economic performance, is expected to give a boost to the ship engine maker's sales down the road.

   "Favorable shipbuilding market conditions, along with the company's production diversification, are forecast to help extend the upturn in engine orders, which started since the second quarter of 2010, down the road," Yoo Sung-mo, an analyst at Shinhan Investment Corp., said in a market report.

   Doosan Engine manufactures diesel engines used in production of large vessels, controlling nearly a 24 percent market share, and produces marine engines with 14 million horsepower annually.

   Doosan Engine's outstanding engine orders reached about 4.9 trillion won as of the end of September last year, which accounted for 2.5 times the firm's 2011 sales target, Hanwha Securities Co.'s report said. For 2011, the firm's new orders may double from last year to 1.7 trillion won, it added.

   The engine maker's stable sales source also helped lure investors, experts noted.

   Nearly 55 percent of Doosan Engine's total sales come from the country's two shipbuilding giants, Samsung Heavy Industries and Daewoo Shipbuilding & Marine, representing a stable captive market, said Lee Ji-hoon, an analyst at SK Securities.

   In December, the engine maker estimated its 2010 earnings at 56 billion won, a sharp turnaround from a 249.7 billion won net loss a year earlier, with sales likely to be little changed at 1.8 trillion won.

  
Doosan Engine President Lee Sung-hee (C) and bourse and brokerage officials celebrate after the firm's listing on the main bourse. (Photo courtesy of the Korea Exchange)


Doosan Engine's remarkable market debut reflects the upbeat mood in the local IPO market and outperformance of newly listed companies.

   Korea Electric Power Industrial Development Co., an affiliate of state electricity agency Korea Electric Power Corp., saw its share prices nearly triple to 15,550 won from its IPO price of 5,500 won since its stock market debut on Dec. 16.

   Daegu City Gas Co., a regional gas provider, also surged a combined 152.8 percent in its first seven consecutive trading sessions since its Dec. 24 market floating.

   Analysts cited relatively low prices of newly listed stocks as a main reason behind the sharp gains as well as ample market liquidity, released due to cheap interest rates.

   "IPO shares were priced cheaply (given that) the local market showed strong performance recently," driving up other existing shares, Lee Sun-yup, an analyst at Shinhan Investment, said. The cited firms' new technology holdings also helped draw investors' attention, Lee said.

   pbr@yna.co.kr
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