LS Cable & System (LS C&S) Asia will be listed on Korea’s main bourse, the KOSPI, next year, LS C&S Asia President Myung Noh-hyung said.
President Myung said in an interview with a vernacular business daily, “We’ve decided to list our company on the domestic bourse with a mission of sharing profits with Korean investors as a Korean company.”
LS Cable & System Asia is a holding company in Korea established by LS-VINA and LSCV, Vietnam-based locally incorporated operations of LS C&S. If it is listed as planned, LS C&S Asia will be the first overseas operation of a Korean company to be put on the Korean bourse, attracting much attention from Korean investors.
In 2011, Korea Exchange (KRX) paved the way for listing such companies as LS Cable & System Asia, a kind of special purpose company, but none has so far been listed.
“We’ve received many calls for listing from investment banks in Hong Kong and Singapore, but we’ve decided to choose the Kospi to share profits with Korean investors as a Korean company,” President Myung said. He went on to say that if LS Cable & System Asia makes it successfully as a first case, it will be a precedent for companies of other groups to follow suit, and the fund being raised from the listing will be invested into overseas operations, and they will invest into Korea to establish a virtuous cycle of investment.
LS C&S established LS-VINA in Haipong to make inroads into Vietnam in 1996. The company set up LS-VINA as a joint venture with HEWMAC, the sole electric cable maker in Vietnam.
Riding on the success of LS-VINA, LS C&S established LSCV, the second locally incorporated production operation in Hoh Chi Min City to produce telecommunications lines. LS C&S has entered the Vietnamese electric and telecommunications line markets and established a system to deliver products across Vietnam within 48 hours.
Myung said, “We top the Vietnamese market with a 30 percent share thanks to its entry 20 years ago, a French company withdrew from Vietnam two years ago, and a Japanese late-comer is struggling to enter the market with higher entry barriers.”
LS C&S controls the Vietnamese market with a big difference with Vietnamese counterparts.
The Vietnamese electric cable market is forecast to grow at least 7 percent as the Vietnamese economy is expected to maintain a growth rate of 7 percent to 8 percent yearly. The reason for LS C&S Asia’s initial public offering on the Korean bourse is to expand investments into Vietnam, and further to the ASEAN markets in the future.
Funds from the listing of LS C&S Asia will be put toward expanding super high-voltage electric cable production facilities at the idle sites of LSCV’s plant, and the Vietnamese operations will serve as a hub to enter Cambodia, Laos, Myanmar, Indonesia and Malaysia, Myung said.
If LS C&S Asia is listed, its capitalization is expected to stand at between 310 billion won to 350 billion won.
LS C&S Asia is wholly owned by LS C&S. LS C&S possesses an 81 stake in LS-VINA and LSCV has a 4 percent interest.
LS C&S’s Lands Underground Cable Project From Singapore
LS C&S has won a $45 million underground cable contract from Singapore PowerGrid. Through this turn-key contract, which covers everything from cable supply to construction, LS C&S will install the cables in Jurong, the largest petrochemical complex in South-East Asia.
In Singapore, industrialization and urbanization have led to continuous demand for power cables. In particular, Singapore had been a difficult market for Korean companies to enter due to the fierce price competition as well as quality competition among advanced companies to win contracts for value-added products and a power network establishment deploying only extra high voltage cables laid underground, rather than hanging from transmission towers.
LS C&S has secured quality and price competitiveness since 2010 by utilizing its subsidiary in Vietnam. The company has been able to position itself as a key supplier in the Singaporean power cable market with a market share of over 35 percent.
Unlike general consumer goods, cross-selling is difficult for power cables. This is because the facilities used for manufacturing products and the country in which the products are manufactured serve as important factors in the bidding as product durability, safety and reliability are considered important.
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