55% Profit Rate... ZenenBio Rises as a Beneficiary Stock of the Typhoon

Waste Management Stocks Rise on 'Barbie' News

[Asia Economy Reporter Minji Lee] As Typhoon No. 8 'Bavi' approaches the Korean Peninsula, stocks related to typhoons and the monsoon season are stirring. According to the Korea Exchange on the 25th, the sectors with the highest rate of increase during the recent correction market were waste management, monsoon, and typhoon-related sectors. Analyzing the sector-wise rate of increase over the last 5 trading days as of the previous day, waste management, typhoon, and monsoon-related sectors showed the highest return of 6%.

With news spreading that the typhoon will enter its influence zone starting tonight from Jeju Island, individual investors appear to have significantly increased their investments in related stocks. The Korea Meteorological Administration has forecasted that this typhoon will be stronger than 'Lingling,' the 5th strongest typhoon to hit the Korean Peninsula last September.

The roof of an apartment collapsed due to the typhoon [Image source=Yonhap News]

The company with the highest rate of increase by stock was ZenenBio. As of 9:30 AM that day, ZenenBio surged 18% compared to the previous close, with a return of 55.38% over the last 5 trading days. Most investors were individuals who net purchased stocks worth 13 billion KRW (2,761,051 shares) during this period. On the previous day alone, they bought stocks worth 11.3 billion KRW.

Taeyoung Construction also rose by 6.79%. Taeyoung Construction maintained its upward trend reflecting the value of its 62.6% stake in its waste management subsidiary TSK Corporation. Additionally, during the same period, Koentec (4.09%), Inseon ENT (4.42%), Y&Tech (3.35%), KG ETS (3.05%), and Kyungnong (2.29%) also saw their stock prices rise.

The reason why companies related to waste management and others show an upward trend ahead of the summer monsoon and typhoon season is that supply is superior to demand. In small-scale cases, local governments can handle waste through industrial complex development and landfill sites by complex, but when waste rapidly increases due to floods and strong winds, the performance of companies handling large-scale waste disposal naturally improves. In the case of final waste disposal businesses, the entry barrier with permits is high, so supply is not flexible. Researcher Junki Baek of NH Investment & Securities explained, "In a situation where securing landfill sites has become difficult, landfill fees are continuously rising, which is positive for related companies."

However, it is pointed out that for companies whose performance is not yet supported, corporate analysis should come first before investing. Looking at ZenenBio's performance, it recorded an operating loss of 4.2 billion KRW in the second quarter. The cumulative loss for the first and second quarters exceeds 8 billion KRW, which is more than the operating loss of 6.3 billion KRW recorded in the first half of last year. Even looking at the last three consecutive years, losses continued with an operating loss of 16.4 billion KRW last year, 2.4 billion KRW in 2018, and 4.7 billion KRW in 2017. Last year, sales related to waste disposal accounted for about 36% on a separate basis.

ZenenBio is classified as a waste management company related to typhoons and monsoons but is also engaged in pharmaceutical and medical device distribution, new drug development, and long-term bio development. Its largest shareholder is Genexine, and last month it applied for a clinical trial of xenotransplantation, transplanting pig corneas and pancreases into humans.