[Featured Stock] Jeongsan Aegang Joins Lee Jae-myung's Public Housing Stocks... Eastaco Soars 9 Times in First Half

Ilseong Construction·KD·Foodwell·Deokshin Housing·Dasco·Beomyang Geonyeong
Following Former Prosecutor General Yoon Seok-yeol, Governor Lee Jae-myung Announces Candidacy
Political Theme Stocks Show Volatile Swings in Stock Market... Investment Caution Advised

[Asia Economy Reporter Hyungsoo Park] Jeongsan Aegang is showing strong performance. This is interpreted as a result of increased interest in public housing-related stocks following the sharp rise of Estaco in the domestic stock market in the first half of this year.

At 1:03 PM on the 1st, Jeongsan Aegang was trading at 2,745 KRW, up 10.46% from the previous day.

Looking at the top buying windows, Kiwoom Securities is followed by JP Morgan, Mirae Asset, and Korea Investment & Securities.

With Gyeonggi Province Governor Lee Jae-myung declaring his presidential candidacy, Ilsung Construction, Beomyang Geonyeong, KD, Deokshin Housing, and Dasco surged. They are seen as beneficiaries of the expansion of basic housing supply.

Ilsung Construction focuses on expanding orders through market development such as trust business, redevelopment and reconstruction projects, FED, and overseas civil engineering, as well as revitalizing sales projects through securing public land. Beomyang Geonyeong is a company engaged in construction and civil engineering contracting and self-construction, and is mentioned as a stock related to Governor Lee’s promoted basic housing policy.

On this day, Governor Lee emphasized regarding real estate issues, "We will further protect actual residential housing while strengthening taxes and financial restrictions on speculative housing, supply appropriate sale housing, and provide sufficient basic housing so that people no longer suffer from housing problems."

Jeongsan Aegang produces and sells PB piping materials for water supply, hot water supply, and heating piping, as well as CPVC fire piping materials. PB piping materials are increasingly adopted not only in apartments but also in general housing due to their excellent properties such as hygiene, strength, and ease of installation. The scope of use is gradually expanding from water supply to heating. According to Jeongsan Aegang’s quarterly report, PB products account for more than 95% of piping materials used for water supply and hot water supply in domestic private apartments. In public housing, since July 2009, water supply and hot water piping materials have been expanded from traditional copper pipes to PB products, and since 2012, 100% application has been in place. Currently, XL piping materials mainly used for heating are inexpensive and used for apartment and housing heating. Recognizing the excellent quality of PB piping materials, most companies including large construction firms are increasingly adopting them for heating piping.

In the public sector, since August 2010, heating piping materials have been changed from existing XL products to PB products, and as the adoption range gradually expands, the heating piping materials market is expected to grow further. In the retail market, due to supply and price increases of traditional copper pipes and issues with installation methods (welding), PB piping materials are increasingly replacing them based on their quality and ease of installation.

C-PVC piping materials are growing as replacements for existing metal fire piping. Compared to metal pipes, they are lighter and easier to install, showing more than 50% sales growth compared to 2014. Fire piping materials are subject to strict regulations under relevant laws due to their product use characteristics. Jeongsan Aegang supplies only materials verified through quality certification and pre-inspection by the Korea Fire Industry Technology Institute to the field.

C-PVC piping materials have been used as fire materials in the EU and North America for over 20 years. They are environmentally friendly products free from carcinogens generated during welding of metal pipes, with secured quality stability. They do not produce scale that occurs in metal pipes, and their light weight reduces the load on buildings. Since 2014, multiple selections of metal pipes and C-PVC piping have been possible for public housing supply, gradually increasing the adoption rate. The adoption rate is expected to increase further.

Jeongsan Aegang recorded sales of 14.6 billion KRW and operating profit of 1.3 billion KRW in the first quarter of this year. Operating profit increased by about 27% compared to the same period last year. The largest shareholder of Jeongsan Aegang is Taekwang Industrial, holding 47.53% of shares.

Meanwhile, the stock with the highest increase rate in the stock market in the first half of this year was political theme stocks linked to prominent presidential candidates. According to the Korea Exchange, from the first trading day of the year, January 4, to June 30, Estaco recorded the highest stock price increase rate across both the KOSPI and KOSDAQ markets. Estaco’s stock price jumped nearly ninefold from 677 KRW at the end of last year to 6,650 KRW at the end of last month. The increase rate reached 882.27%. Estaco, listed on the KOSPI, is a company engaged in real estate sales and leasing. It surged as a theme stock related to Gyeonggi Governor Lee Jae-myung’s long-term public housing policy.

Estaco has disclosed that it is unrelated to Governor Lee Jae-myung, but its stock price fluctuates whenever related issues arise. Political theme stocks that surge and fall repeatedly during election seasons mostly do so regardless of corporate fundamentals, raising concerns that investors need to be cautious.