[Featured Stock] Poongsan Plummets 8% on Physical Division... Investor Sentiment Worsens Despite New Company Remaining Unlisted

[Asia Economy Reporter Lee Seon-ae] On the 8th, Pungsan's stock price showed a sharp decline of over 8% from the beginning of the trading session.

At 9:26 a.m. that day, Pungsan was trading at 28,000 KRW, down 8.05% compared to the previous trading day. The news of the physical division weighed on the stock price. Pungsan announced that it held a board meeting the previous day and resolved to physically split its defense business. After approval at an extraordinary shareholders' meeting scheduled for the end of October, a newly established company dedicated to the defense business, tentatively named 'Pungsan Defense,' is expected to officially launch in December.

The split will be conducted as a physical division in which the surviving company, Pungsan, acquires all issued shares of the newly established company. Physical divisions generally act as negative factors for stock prices due to the possibility of the new company being listed.

Pungsan stated that the newly established defense company will remain unlisted, but concerns about the split of a core business segment appear to have affected investor sentiment.

However, Byun Jong-man, a researcher at NH Investment & Securities, emphasized, "Since the surviving company holds 100% of the shares of the new company and maintains its unlisted status through the physical division, there is no change in corporate value due to this corporate split at this point." He added, "In the long term, the value of the defense business is expected to be highlighted, and efficiency and growth through independent management are anticipated."

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