The STX Pan Ocean Co. headquarters in Seoul. Photographer: SeongJoon Cho/Bloomberg

STX Group may become the first South
Korean company to list in Hong Kong as it mulls 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 an 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 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 predominately makes ships that can move
commodities, containers and drill for oil. In August, it won a
$250 million contract to build a drill 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 2.7 percent to 32,450 won at the 3 p.m.
close in Seoul, the highest closing price since Feb. 7. STX
Corp. climbed 3.8 percent to 27,700 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 today for a holiday.

Hong Kong IPOs

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
($113 billion) 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.

The group also controls shipping line STX Pan Ocean Ltd.,
which is listed in Singapore and South Korea, as well having a
construction arm and a solar-energy unit.

To contact the reporter on this story:
Kyunghee Park in Singapore at
kpark3@bloomberg.net

To contact the editor responsible for this story:
Neil Denslow at
ndenslow@bloomberg.net