It has been a big year for South Korean marine services provider HD Hyundai Marine Solution president and chief executive Ki-dong Lee.

HD Marine Solution was listed on the Korea Exchange in May 2024, with the heavily oversubscribed IPO proving to be the largest in the country since January 2022.

The listing raised KRW 742.2bn — then $538m — valuing the business at around KRW 3.71trn.

There are many CEOs but not all do an IPO in their working life, Lee told TradeWinds, “so it is quite an achievement”.

HD Marine Solution is just eight years old. It was set up by parent HD Hyundai Group in 2016 to offer products and services throughout a vessel’s lifespan. Today it provides aftercare services, eco-friendly retrofitting, software technology and bunkering services.

Lee, an HD Hyundai Heavy Industries lifer who was previously head of its engineering and machinery division, proudly recounts that company revenue has shot up almost sixfold from KRW 240bn in 2017 to KRW 1.4trn in 2023.

But it has even bigger ambitions, particularly in a sector where retrofits to meet decarbonisation targets and regulations are moving into sharp focus.

The CEO said the company wants to become the world’s number one in marine services and engineering. He claims HD Marine Solution is “unique”, with no competitors, as it offers the whole scope of after-market services — something he admitted was “not easy” to explain to investors during the IPO.

Lee, a mechanical engineer by training who joined what was then Hyundai Heavy Industries in 1985, said the company’s “major cash cow” is its parts and technical services, with trade in play with more than 500 companies worldwide.

But Lee said decarbonisation and conversion solutions are also in high demand.

The company has done more than 1,000 eco-friendly retrofit projects. Lee claims HD Marine Solution is the only company that can do turnkey solutions as it shares all the new technologies applied to newbuildings built at the HD Hyundai Group yards and can easily transfer these over to the retrofit area.

A minor retrofit job might entail fitting energy-saving devices that improve a vessel’s efficiency by 2% to 3%, typically costing less than $1m.

Medium-sized jobs entail installing air lubrication and shaft generating systems or alternative maritime power at the cost of a few million dollars.

Large jobs of more than $10m involve reliquefaction modifications and conversions.

Breaking new ground

Lee said the conversion market, which includes LNG carrier-to-floating storage units or floating storage and regasification units and conversions to dual-fuelled vessels, is experiencing significant growth.

The company recently won its first FSU job, which the CEO said marked “a key achievement”. HD Marine Solution is set to convert a Knutsen OAS Shipping LNG carrier into an FSU destined for Honduras.

Factfile — HD Hyundai Marine Solution
  • Founded: 2016
  • Head office: Busan
  • Regional offices: 11
  • President & CEO: KD Lee
  • Employees: 829
  • Stock listed: 2024
  • Revenue in 2023: KRW 1.43trn
  • Engineering projects: 638
Source: HD Marine Solution

The chief revealed many LNG carrier-to-FSRU project conversion discussions are underway and believes the company can win a first contract before the end of 2024.

HD Marine Solutions is also looking ahead to new technologies, such as onboard carbon captures, and is open to strategic partnerships and acquisitions — recently paying out about $20m to buy a small Korean data source company.

Yard ambitions

But Lee stressed that HD Marine Solutions is an asset-light company.

Despite being a part of the huge HD Hyundai Group, the company has no facilities to undertake retrofit work, particularly as the group’s yards are occupied for the next three years with newbuildings.

Instead, HD Marine Solutions uses 50 shipyards worldwide.

Lee said the company undertakes the engineering works, buys equipment from its suppliers, and sends engineers and providers to the yards where it controls the work.

He said the retrofit market is currently “highly competitive”, especially in Asia.

“To meet rising demand and stay ahead we are expanding our facilities and capabilities,” he added.

Lee revealed that the company plans to invest in an overseas yard to expand its repair network, particularly for large ships and big work volumes.

“We are considering investing in such a yard in the South Asian area,” he said but declined to reveal where this might be.

The CEO also added that as the industry shifts from ballast water systems and scrubbers to next-generation retrofits, the company plans to slimline operations and acquire design expertise to explore new growth areas such as electric propulsion for small vessels.

Speed focus

Lee said HD Marine Solutions must also invest in expanding its logistics provisions.

The company has warehouses in South Korea, Rotterdam, Singapore, Dubai and Houston, from which it supplies parts.

He said the key to competition in this so-called “after-market” is “quick delivery”, so inventory is also very important.

The company recently won a long-term service agreement that includes supplying parts and technical services from a European shipowner, which he said is worth $60m.

The CEO said at least 40% of HD Marine Solution’s proceeds will be used to expand the company’s warehousing and increase its inventory levels.

Lee, who took on the top job during the height of the Covid-19 pandemic in December 2020, admits there are challenges in the retrofit business.

He highlighted navigating complex and ever-changing environmental regulations as one. Lee said uncertainty remains in the industry, with many players taking a wait-and-see approach until the rules are more clearly defined.

The chief said that currently, LNG fuelling is the “mega-trend” but he expects other fuels to come to the fore.

Meeting tight turnover times can also prove tough as does managing fluctuating demand — partly driven by global economic conditions — which can make it harder to maintain a consistent workflow and capacity utilisation.

To unwind, the HD Hyundai veteran said he enjoys walking — at least 1.5 hours and 10,000 steps a day — and said this gives him “good thinking time”.

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