'Split' Companies, Stock Prices Vary

F&F Rises 36% After Spin-Off
F&F Holdings Weakens After Shedding Fashion Business
LG and LX Holdings Also Struggle Consecutively

[Asia Economy Reporter Song Hwajeong] Recently, as major companies have completed their spin-offs and been listed one after another, their stock prices are showing mixed performances. While F&F is showing strength due to the strong performance of consumer-related stocks, other stocks are struggling.

As of 9:20 a.m. on the 2nd, F&F was trading at 494,000 won, up 1,500 won (0.30%) from the previous day. It showed a slight upward trend, continuing its rise for four consecutive days. F&F decided on a spin-off at the end of last year to transition to a holding company structure. After the spin-off, the surviving company became F&F Holdings, the holding company division, and the newly established company F&F, responsible for the fashion business division, was re-listed on the 21st of last month. Except for two days after listing, F&F has shown an upward trend. Based on the previous day's closing price, it has risen 36.81% compared to the opening price.

With expectations of continued corporate value growth due to consumer recovery and growth in the Chinese market, the operating company F&F is showing strength, while F&F Holdings, which was separated from the fashion business division, continues to show weakness. After recording the lower limit price for two consecutive days after listing, it only showed an upward trend for two days, with all other days showing declines. Korea Investment & Securities said about F&F, "With differentiated growth drivers, the pace of profit increase is steep," adding, "F&F's average annual operating profit growth rate until 2023 is expected to be 30%, significantly exceeding the average of 18% for clothing brand companies." Korea Investment & Securities gave F&F a 'Buy' rating and a target price of 580,000 won.

LG and LX Holdings, which changed their listings after spin-offs on the 27th of last month, are also experiencing sluggish stock prices. LG saw a sharp drop of over 9% on its first day of listing and has continued to weaken since. It has fallen 15.48% from the opening price, threatening the 100,000 won level. LG previously closed at a record high of 125,000 won just before the trading halt. LX Holdings, which includes subsidiaries such as LG International, LG Hausys, Silicon Works, and LG MMA, is also down 13.04% from its opening price.

However, this decline in stock prices is considered excessive. Yang Jihwan, a researcher at Daishin Securities, analyzed, "The decline in LG's stock price is presumed to reflect the exclusion of affiliates incorporated into LX Holdings when calculating net asset value (NAV)," adding, "The decrease in market capitalization is much larger than the NAV reduction of the excluded companies, indicating an excessive decline."

Similarly, the stock prices of EcoPro and EcoPro HN, which were re-listed after spin-offs, are falling short of expectations. EcoPro HN, a newly established company from the environmental business division of EcoPro through a spin-off, hit the upper limit price on its first day of listing but has since continued to weaken. EcoPro also showed a decline after rising on the first day.