Cho Won-tae's Landslide Victory, Hanjin Kal Soars Consecutively

Up 19.76%... Strong Performance Amid Ongoing Management Dispute and Prospects of Additional Share Acquisition

On the 27th, shareholders and executives moved inside the building at the 'Hanjin KAL 7th Regular General Meeting of Shareholders' held at the Hanjin Building Main Office in Jung-gu, Seoul. Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporter Park Jihwan] In the management rights dispute between the siblings of the Hanjin family, Chairman Cho Won-tae of Hanjin Group emerged victorious, drawing attention to the future stock price movement of Hanjin KAL. The stock price of Hanjin KAL has shown strength not based on the company's fundamentals (performance) but rather due to the intensifying management rights dispute within Hanjin Group. Considering the current conditions of the airline industry, the stock price is considered overvalued, and there is an analysis that price volatility may increase.

According to the Korea Exchange on the 30th, at 10:03 a.m. that day, Hanjin KAL recorded 68,500 KRW, up 19.76% from the previous close. On the 27th, Hanjin KAL also rose to the price limit and closed at 57,200 KRW. The stock price of Hanjin KAL has risen more than 70% since the beginning of the year from 39,950 KRW. While the domestic stock market was hit hard by the impact of the novel coronavirus disease (COVID-19), Hanjin KAL has been rising alone sharply.

Despite Chairman Cho’s successful reappointment as an inside director (3-year term) at the Hanjin KAL regular shareholders' meeting, the stock price continues to show strength because the prevailing view is that the competition between the Cho Won-tae and Cho Hyun-ah three-party alliance will continue. The three-party alliance steadily increased its stake in Hanjin KAL to 42.13% even after the shareholder registry was closed at the end of last year. It is closely trailing Chairman Cho’s 42.39%. The three-party alliance is expected to continue acquiring additional shares for the time being in preparation for an extraordinary shareholders' meeting or next year’s regular shareholders' meeting. The combined stake held by Chairman Cho and the three-party alliance reaches the mid-80% range.

In a situation where the number of tradable shares is already insufficient, the competition to secure additional shares inevitably leads to a rise in stock price. Kim Jang-won, a researcher at IBK Investment & Securities, explained, "Hanjin KAL surged due to supply and demand factors caused by the stake competition between both sides," adding, "Considering that the three-party alliance has secured additional shares of Hanjin KAL regardless of this shareholders' meeting, the stake competition between both sides is expected to continue for the time being."

However, since Hanjin KAL’s stock price has moved based on supply and demand due to the management rights dispute rather than corporate performance, there are warnings of a high risk of a sharp decline. Choi Nam-gon, a researcher at Yuanta Securities, diagnosed, "As long as the competition to secure voting rights continues, the volatility of Hanjin KAL’s stock price is expected to remain high," adding, "Once the voting rights battle concludes after the extraordinary shareholders' meeting, considering the management status of major subsidiaries such as Korean Air, Jin Air, and the KAL Hotel Network, Hanjin KAL’s stock price could fall below 33,000 KRW."