Bold business movers lead Kospi gains over the last year

2021.04.05 16:11:36 | 2021.04.05 16:12:49

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Samsung Electronics Co., Hyundai Motor Co., SK Inc., LG Electronics Inc., Lotte Fine Chemical Co., Posco Chemical Co. and Hanwha Solutions Corp. stood out in stock outperformance on the Kospi market thanks to the common feature of wowing investors with bold business moves.

The seven stocks surged 96 percent from January 2020 to March 2021, doubling 41 percent gain in the benchmark index.

Hyundai Motor soared 85 percent since last year’s opening, LG Electronics 111 percent, and Posco Chemical 214 percent.

They commonly took bold business moves.

SK Inc., the holding entity of Korea’s third largest conglomerate SK Group, has strengthened role as the group’s investment arm. It arranged a $300 million new mobility fund with China’s Zhejiang Geely Holding Group on March 15 and acquired French biologic contract manufacturing organization Yposkesi on March 31, accelerating its push to expand presence in the burgeoning biologic CMO market.

Samsung Electronics has been aggressive to bolster foundry segment.

“Samsung Electronics is carefully watching all industries for M&As to continue sustainable growth. We can’t elaborate the detailed timing but will capture new business opportunities through strategic M&As,” said Kim Ki-nam, head of the device solutions unit, signaling change in business during its shareholders’ meeting last month.

Hyundai Motor has already transformed itself into an integrated future mobility provider with massive investment on ground and aerial new mobility and robotics. It signed more than 30 M&A and share purchase deals for the past three years.

“With the mobility shift to electric vehicles from combustion engine-powered cars, nearly 37 percent of existing components will go out of sight and new technologies will fill the void. It would be difficult to support the fast change without M&As or stock investment,” said Ko Tae-bong, a managing director at HI Investment & Securities.

LG Group also has been active in realigning business structure in line with the changes of times under the leadership of 40-something leader Koo Kwang-mo.

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The launch of Korea’s first pure-play battery maker LG Energy Solution in December made the centerpiece. The standalone battery entity officially set sail three months after LG Chem announced the demerger and has embarked on its debut on the stock market this year, what would be the country’s largest initial offering with an estimated 100 trillion won ($88.66 billion) worth valuation.

Posco Chemical is rearranging its business portfolio to become an EV battery materials company to join the booming EV market. Hanwha Solutions, which is expanding business to hydrogen and eco-friendly plastics, has acquired the whole stake in U.S.-based hydrogen tank maker Cimarron, armed with patented technology to store hydrogen fuel for spaceship.

With aggressive investment in new businesses, the companies hired more and increased the payroll by an average 4 percent as of the end of last year. Hanwha Solutions reported an exceptional expansion of payroll, more than doubling to 5,586 from a year earlier.

Earnings outlook also is rosier than others.

According to Seoul-based financial data provider FnGuide, SK Inc. is estimated to have swung to an operating profit of 847.7 billion won for the quarter ended March, reversing from a loss of 922.7 billion won from the same period a year ago.

Hyundai Motor is projected to report a 76 percent growth in operating profit, Posco Chemical 58 percent, and Hanwha Solutions 19 percent.

By Lee Yun-jae, Seo Jin-woo, Lee Jong-hyuk and Lee Ha-yeon

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