Holding Company Stock Prices Show Deepening 'Binikbinbuikbu' Trend... Focus on LG CNS Listing Effect

[Asia Economy Reporter Lee Seon-ae] Amid the 'rich get richer, poor get poorer' trend in holding company stock prices, an analysis suggests that this phenomenon will intensify going forward.

According to Yuanta Securities on the 9th, the average stock return of holding companies over the past week was -0.8%. The best performer of the week was GS (+9.2%), while the worst was SK (-3.5%). Institutional investors most heavily net bought Samsung SDS (+31.9 billion KRW) and most heavily net sold SK (-22.5 billion KRW) during the week. Foreign investors most heavily net bought SK (+16.6 billion KRW) and most heavily net sold Hanwha (-4.1 billion KRW). Based on major holding companies, the net buying volume by domestic institutional investors reached 71.7 billion KRW, and net buying by foreign investors reached 42.5 billion KRW.

Choi Nam-gon, a researcher at Yuanta Securities, diagnosed, "The 'rich get richer, poor get poorer' phenomenon appears to stem from the market's divergent preferences between visible and invisible assets. Due to macro environment changes such as interest rate hikes, market preference for intangible assets has weakened, and the reflection of the market capitalization of listed subsidiaries in holding companies is proceeding very cautiously. Meanwhile, investors are relatively more actively reflecting ① the separate performance of holding companies and ② the performance of unlisted subsidiaries."

Accordingly, a relatively strong trend is expected to continue centered on Samsung C&T, which has improved performance in the trading sector; GS, which is expected to have favorable subsidiary performance due to the surge in SMP; and SK, which is expected to see performance improvements in major unlisted subsidiaries such as SK E&S and SK Siltron. In particular, GS, which is expected to benefit from the rise in oil prices, is anticipated to see stock price strength as net buying by institutional and foreign investors concentrates.

Meanwhile, the planned IPO of LG CNS is also a focus. Researcher Choi emphasized, "For the LG CNS IPO to be linked to LG's corporate value, it must be clearly defined during the listing process what tangible benefits LG shareholders can receive. For example, if LG sells some of its existing shares during the IPO process and uses the cash inflow from the sale to repurchase LG treasury shares or expand dividends, the LG CNS IPO could act as a positive factor for LG's stock price."

LG CNS completed sending the Request for Proposal for selecting IPO underwriters to domestic and foreign securities firms on the 2nd. The corporate value is expected to be around 7 trillion KRW, with the listing likely in 2023. The funds raised through the IPO are expected to be invested in new growth businesses such as the MyData business.

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