HDC Hyundai Development Company Hits 52-Week Low Amid Large-Scale Capital Increase

Capital Increase of 407.5 Billion KRW for Asiana Acquisition... Securities Firms Uniformly Lower Target Prices

[Asia Economy Reporter Kum Boryeong] HDC Hyundai Development Company’s stock price plunged after it proceeded with a paid-in capital increase exceeding 400 billion KRW to acquire Asiana Airlines.

According to the Korea Exchange on the 13th, HDC Hyundai Development Company’s stock price was 22,350 KRW at 10:20 a.m., down 5.7% (1,350 KRW) from the previous close. During the session, it fell to as low as 22,300 KRW, marking a 52-week low.

HDC Hyundai Development Company announced on the 10th that it decided on a paid-in capital increase worth 407.5 billion KRW to secure funds for acquiring Asiana Airlines. The planned issue price was set at 18,550 KRW, a 15% discount from the reference stock price of 23,450 KRW. The number of new shares to be issued is 21,969,110, which is about 50% of the total issued shares.

Of the total acquisition price of 2.5 trillion KRW for Asiana Airlines, excluding 500 billion KRW from Mirae Asset Daewoo, HDC Hyundai Development Company’s input cost of 2 trillion KRW is expected to be composed of 500 billion KRW in cash, 400 billion KRW from this paid-in capital increase, and 1.1 trillion KRW from other financing sources.

This decision is analyzed as inevitably being negatively evaluated in terms of corporate value. Baek Jae-seung, a researcher at Samsung Securities, said, “Capital expansion for demonstrating capabilities as a real estate development company may slow down, and the decision for a paid-in capital increase to minimize credit rating and existing business impact ultimately reflects the company’s perception of shareholder value.” He added, “For the expansion of HDC Group’s business scale through entry into the aviation industry to be positive even for HDC Hyundai Development Company’s shareholders, enhancing the value of the acquired company is essential, but confidence in this is still lacking.”

Another issue is that Asiana Airlines will be reflected in HDC Hyundai Development Company’s consolidated financial results. Asiana Airlines has been posting losses since 2018. In the third quarter of last year, it recorded cumulative sales of 5.3 trillion KRW, an operating loss of 173.9 billion KRW, and a net loss of 524.1 billion KRW.

Securities firms unanimously lowered their target prices for HDC Hyundai Development Company. Samsung Securities cut its previous target price from 34,000 KRW to 24,000 KRW, a 29% decrease. Ebest Investment & Securities revised its target price from 40,000 KRW to 25,000 KRW, and Cape Investment & Securities adjusted its target price from 43,000 KRW to 24,000 KRW.

This content was produced with the assistance of AI translation services.