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Lock & Lock, Hyundai, Woori Finance: South Korea Equity Preview


The following companies may have unusual price changes in South Korea After the North Korean Attacked to the South Korean Island. Stock symbols are in parentheses, and share prices are from the previous close.

The Kospi index rose 0.1 percent to 1,927.68.

Daewoo Shipbuilding & Marine Engineering Co. (042660 KS): The shipbuilder is likely to win a $4 billion order to build 20 container vessels for A.P. Moeller-Maersk A/S, Korea Economic Daily reported yesterday, citing industry officials it didn’t identify. Daewoo fell 1.7 percent to 28,200 won.

Hyundai Engineering & Construction Co. (000720 KS): Creditors of the builder asked Hyundai Group to provide more proof of how it will fund its planned acquisition of Hyundai Engineering, according to an e-mailed statement yesterday by Korea Finance Corp., the biggest shareholder of the South Korean builder. Hyundai Engineering climbed 4.3 percent to 63,300 won.

Lock & Lock Co. (115390 KS): The company was rated new “buy” by Samsung Securities Co., with a target price of 46,000 won. The maker of plastic food containers rose 3.2 percent to 38,450 won.

Maeil Diary Industry Co. (005990 KS): The milk maker will work with Sapporo Holdings Ltd. to sell Sapporo’s beer in South Korea, the Japanese brewer said yesterday in a statement. Maeil shares gained 2.4 percent to 19,600 won.

Woori Finance Holdings Co. (053000 KS): A group led by employees of Woori will submit a preliminary bid as the government privatizes the company, Maeil Business Newspaper reported yesterday, citing a Woori official it didn’t identify. Vogo Fund may separately bid for Woori, the report said. Woori rose 4.7 percent to 14,450 won.

To contact the reporter on this story: Jun Yang in Seoul at /Editor  :Darren Boey at


Hyundai Engineering & Construction's $4.8 billion sale at risk on funding plan


The $ 4.8 Billion sale of stake in Hyundai Engineering & Construction Co Ltd (000720.KS) may be at risk as top shareholders delay signing a deal while awaiting clarification on funding plans from Hyundai Group.

Shipping-focused underdog Hyundai Group was unexpectedly picked as preferred bidder for the 35 percent stake on November 16, beating out rival Hyundai Motor Group.

Hyundai Group offered about 5.5 trillion won ($4.8 billion) -- more than double the current market value of the country's top contractor -- but has failed to sign a preliminary agreement with creditors-turned-shareholders ahead of the November 29 deadline.

The major shareholders of Hyundai E&C requested additional information on Hyundai Group's financing plans, which involve a 1.2 trillion won loan from France's Natixis SA (CNAT.PA) amid market speculation that Hyundai Group might have offered group shares as collateral.

"We want additional information on the financing, including the lending agreement between Hyundai and Natixis," said a spokesman for Korea Exchange Bank (004940.KS) a major E&C shareholder.

Hyundai Group has said the French investment bank extended the loan without collateral and the deposit was legitimate, a source close to the matter said.

Hyundai Group said on Friday that demands for further verification at the preliminary deal stage violated bidding rules, and urged Hyundai E&C's top shareholders to sign the deal by the Monday deadline.

"We are waiting for Hyundai Group to submit the documents. We will decide (whether to sign a deal) after reviewing the documents," Korea Finance Corp President Ryu Jae-han told Reuters on Friday.

Hyundai Group has also demanded that shareholders withdraw their nomination of Hyundai Motor Group as reserve bidder, arguing that the auto-focused group had leaked confidential bidding information and spread false rumors.

The dispute is the latest twist in an acrimonious battle between the conglomerate and Hyundai Motor Group after the original Hyundai group was torn apart by family infighting.

Hyundai Motor Group, the world's fifth-largest automaker, lost out to Hyundai Group after a 5.1 trillion won offer. It has refrained from publicly responding to its rival's criticisms.

But the group had asked questions about sale process to creditors via advisor Goldman Sachs (GS.N) a source close to the matter told Reuters.


(by Reuters:  Hyunjoo Jin; Editing by Chris Lewis)


Hyundai Steel’s Dangjin plant brings green approach to steel

Hyundai Steel’s new blast furnace (right) at the company’s plant in Dangjin, South Chungcheong Province. (Hyundai Steel)

With the second blast furnace kicking in, the annual production capacity of Hyundai Steel’s integrated steelworks in Dangjin, South Chungcheong Province has doubled to 8 million tons.

While the Dangjin plant allowed Hyundai Steel to begin producing steel from the raw materials, which according to experts offers a higher profit margin than using electric arc furnaces, the facility has larger implications for Hyundai Motor Group as a whole.

By adding blast furnaces to its operations, Hyundai Motor Group was able to complete what it calls “resource circulating business structure” that goes from molten iron to automobiles, and from scrap back to unprocessed steel.

Under the resource circulating business structure, steel produced at the Dangjin plant will be processed by Hyundai Hysco into cold-rolled products, which will then be used in Hyundai Motor Co. and Kia Motors Corp.’s vehicles.

The steel from scrapped vehicles will then be melted down at Hyundai Steel’s electric blast furnace and used to produce construction materials, which will be used by the group’s construction arm Amco.

However, Hyundai Steel’s move upstream in the steel industry comes at a time when environmental concerns are rising.

The steel industry has long been considered to be one of the more serious polluters, and the use of coal as a raw material in steelmaking with blast furnaces highly carbon intensive.

Hyundai Steel’s Dangjin plant, however, was built with such concerns in mind from the designing process.

In building the plant, the company installed the world’s first enclosed raw material processing system as part of its efforts to make it a “world-class eco-friendly steelworks.”

In Hyundai Steel’s system, all movement of materials from ship to processing facilities occur on enclosed conveyor belts. In addition, the materials are stored in dome-shaped stores cutting off all contact with open air, addressing the problem of dust from coal and other materials ― a major pollutant associated with steelworks ― at the source.

According to the company the enclosed domes also help save space in storing the materials.

Hyundai Steel estimates that the dome stores are about 2.5 times more efficient in terms of iron ore storage per unit area.

In addition, Dangjin plant’s enclosed storage facilities also allow the company to save fuel, which in turn helps reduce its carbon footprint.

According to Hyundai Steel, the facilities maintain the water content of the materials constant at between 6 to 8 percent. In contrast, materials stored outside can contain up to 14 percent water during the rainy season, and this water needs to be evaporated leading to additional energy costs.

However, the effect of eco-friendly technologies is not limited to the more obvious benefits of reducing pollution, but extends to the productivity of companies and nations.

According to a report by Oh Dong-hyun of the Samsung Economic Research Institute, Korea ranks third among members of the Organization for Economic Cooperation and Development, with an average annual growth rate of 4.84 percent.
However, the country ranks 22nd in terms of green productivity, which takes into account the effects “non-economic” by-products, such as greenhouse gases, have on the economy, among the 32 OECD member nations.

According to the SERI report, green management’s core consists of three Rs; reduce, replace and recycle.

In addition to the groundbreaking enclosed raw material storage system, Hyundai Steel’s Dangjin plant has a number of features for meeting various areas of the three Rs of green management.

According to the company, the Dangjin plant is capable of recycling almost 100 percent of the by-products of steel making.

The company said that nearly all of the coal tar and sulfur produced from processing the gas generated in producing coke is used to produce a range of chemicals including benzene and toluene, while the slag is used in blended cement and used to form roadbeds and as structural material in buildings.

In addition to recycling by-products, the company has a number of measures for processing waste water, and monitoring and reducing emissions of sulfur and nitrogen oxides.

According to the company, gases generated during steel making at the Dangjin plant under go a two-step process to bring sulfur and nitrogen oxides content to well below the legal limits.

Waste water generated at the plant is subjected to chemical and biological processing to maximize recycling, while the unused processed waste water is returned to the sea 300 meters away from the coastline to minimize pollution.

By Choi He-suk (

Hyundai Motor sales surge in Latin markets

Hyundai Motor Co., Korea’s largest automaker, said Tuesday its sales in South American nations have surged nearly 29 percent this year, already surpassing the figure for all of 2009.

In the first 10 months of this year, the company sold 186,206 vehicles in the region, up 28.7 percent from the same period last year. The company sold 180,355 units in the entire year of 2009.

Sales in Argentina nearly doubled as they rose 91.9 percent from a year earlier while shipments in the Dominican Republic jumped 78.1 percent on-year and those in Puerto Rico 76 percent, according to company officials.

Hyundai’s market shares in six different countries, including Ecuador, Chile and Panama, have also exceeded 10 percent.

“Recording an over 10 percent market share in so many countries of South America where the company does not have a production facility means it is doing extremely well,” a company official said.

In Panama, Hyundai sold 6,181 vehicles in the January-October period, trailing Toyota with 7,052 units for the spot of the top-selling foreign brand there this year.

“If Hyundai does become the top-selling brand in Panama this year, it would have a significant meaning as it will be the first time for Hyundai to become the top seller in any South American nation,” the company official said.

Currently, South America accounts for only 6.2 percent of Hyundai’s global sales, but the company is planning to build a plant in Brazil, as early as from next month, as it believes the region will soon become one of the largest markets in the world.

Meanwhile, Hyundai Motor Co. and affiliate Kia Motors Corp. have surpassed Toyota Motor Corp. as the largest Asian carmaker in Europe this year after the Japanese company’s sales tumbled on recalls, according to data released by the European Automobile Manufacturers’ Association

The two firms boosted Europe sales 4 percent in the first 10 months to 521,369 vehicles, . Toyota sales, including its Lexus premium brand, plunged 17 percent to 511,754.

The Seoul-based group has withstood slumping European auto demand this year. The carmaker has also won market share in the U.S. from Toyota after the Toyota City- based company recalled more than 8 million vehicles worldwide for repairs related to unintended accelerations.

“Hyundai and Kia have clearly benefitted from Toyota’s massive recalls,” said Ahn Sang-joon, an auto analyst at Tong Yang Securities Inc. in Seoul. “They have also expanded their model lineups in European markets giving more choices to consumers.”

Overall auto sales in Europe have fallen 5 percent this year to 11.6 million, according to the automakers group. Nissan Motor Co. has posted the biggest increase among major brands, with sales climbing 13 percent.

The Korean automakers’ European sales may climb even more next year as they are preparing to introduce new models specifically designed for the region, said Kim Byung Kuk, a Seoul-based analyst at Daishin Securities Co.

Hyundai fell 4 percent to close at 180,500 won in Seoul trading today, while Kia dropped 2.3 percent to 50,600 won. Hyundai owns 34 percent of Kia. Toyota gained 1.1 percent to 3,300 yen in Tokyo.


(From news reports)


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