▶주메뉴 바로가기

▶본문 바로가기

THE INVESTOR
October 23, 2019
Big Reunion

Finance

Analysts bullish on shares of chaebol holding firms

  • PUBLISHED :December 13, 2018 - 14:40
  • UPDATED :December 13, 2018 - 15:56
  • 폰트작게
  • 폰트크게
  • facebook
  • twitter
  • sms
  • print

[THE INVESTOR] The National Pension Service’s adoption of a stewardship code in July and increasing activities by local activist funds are likely to boost shareholder returns and optimization of corporate assets by conglomerates, according to market watchers on Dec. 13.

The country’s major brokerages -- Hana Financial Investment, Samsung Securities, Hi Investment & Securities and Korea Investment and Securities -- are of the opinion that investors should pay attention to investment opportunities following heightened investor activism.

“The stock values of the holding firms of conglomerates are relatively low, making them vulnerable to attacks by activist funds,” said Oh Jin-won, a Hana Financial analyst. “As shareholder activism increases, we should pay more attention to the valuation of holding companies.” 





Hana Financial, Samsung Securities and Hi Investment have picked Lotte Group as the most attractive target.

The retail giant has said it plans to buy back and retire 10 percent shares while seeking to exit its financial operations.

“Lotte has announced that it will increase corporate value by selling unlisted subsidiaries and financial units,” said Shin Seung-jin, an analyst at Samsung Securities. “Its shares are currently trading at a discount of 40 percent compared to the value of its net assets.”

Hanjin KAL, which was recently targeted by an activist fund, was picked by Hana Financial and Hi Investment. “The involvement of activist fund KCGI could increase its corporate value,” said Hi Investment analyst Lee Sang-heon.

KCGI announced on Nov. 15 that it has bought 9 percent stake in Hanjin KAL, becoming the second-largest shareholder of the holding company of the country’s largest airline.

Hana Financial and Hi Investment also recommended SK Group.

“SK Group is currently pushing for an IPO of SK Biopharmaceuticals and plans to use part of the proceeds for special dividends.

In addition, Samsung Securities and Hana Financial have recommended Hyundai Heavy Industries.

“The company’s value could further grow once Hyundai Oilbank goes public,” Samsung Securities analyst Han Young-soo wrote. “Moreover, proceeds from the IPO would probably increase anticipation of the group adopting a more aggressive shareholder returns policy.”

However, the analysts warned that these investment opportunities based on improvement of the valuation of holding companies would take some time.

An activist fund Value Partners has sent out six requests to KISCO Holdings, the holding company of two steel companies, since July 2017, but has not received any replies.

“In other countries, companies explain their position in detail once they receive requests or demands from shareholders, but it’s often very difficult to even meet an investor relations officer in Korea, not to mention the CEO,” an asset manager said.

“Whether it is a one-time event or could bring about fundamental changes to Korea’s stock market just like in Taiwan, Japan and the UK, is all up to investors,” said Yoon Tae-ho, an analyst with Korea Investment and Securities.

According to the Korea Corporate Governance Service, 70 institutional investors have adopted the stewardship code as of early December. 

By Park Ga-young (gypark@heraldcorp.com)

  • facebook
  • twitter
  • sms
  • print

EDITOR'S PICKS