[New Market Cap Rankings] ⑤ Krafton·LX... A Look at Companies Debuting in the '1 Trillion Won Club' Market Cap

Editor's NoteDomestic stock markets have continued to underperform this year. As central banks worldwide have rushed to raise benchmark interest rates to combat inflation, funds have been flowing out of the stock market. The KOSPI, which was above 3,300 points in July last year, has fallen to the 2,300 level. It has dropped nearly 1,000 points over the past 16 months. Coupled with the semiconductor industry's downturn, Samsung Electronics, the leading stock in the domestic market, has also struggled. The U.S. Federal Reserve (Fed) projected after the November Federal Open Market Committee (FOMC) meeting that the final peak of the benchmark interest rate would be higher than previously expected. The stock market, which had risen based on asset liquidity until last year, is likely to continue to show weakness next year. It is difficult to predict the future without understanding the current changes. Asia Economy conducted a comprehensive survey of changes in market capitalization of corporate groups with over 1 trillion won in market cap in the domestic stock market. On July 6 last year, when the KOSPI closed at an all-time high, there were 219 corporate groups with market caps over 1 trillion won, but this number decreased to 164 as of last month’s 31st. We examine the changes in rankings and market cap increases and decreases of the top corporate groups.

[Image source=Yonhap News]

[Asia Economy Reporter Lee Myunghwan] Even as the stock index peaked and then fell sharply, some corporate groups newly joined the 1 trillion won market capitalization club. Companies newly listed through initial public offerings (IPOs) or those spun off from existing large corporate groups joined the 1 trillion won club. Market caps of secondary battery material specialist companies also increased significantly.

Krafton, which was listed on the KOSPI in August last year, joined the list by surpassing a market cap of 1 trillion won after its listing. Krafton went public on the Korea Exchange in August last year, led by its flagship title ‘PUBG: Battlegrounds’ (hereafter Battlegrounds). Although it was considered a marquee IPO and attracted high investor expectations, Krafton received lower-than-expected subscription results due to a high offering price before listing. After listing, the stock price continued to decline as the new release ‘New State’ failed to meet expectations in performance.

Although Krafton’s market capitalization exceeded 1 trillion won, its market cap size halved after listing. As of last month’s 31st, Krafton’s market cap was 8.7103 trillion won, about a 60% decrease compared to the first day of listing. However, there remains potential for Krafton’s stock price to rebound. Jeong Hoyoon, a researcher at Korea Investment & Securities, analyzed, "The new title ‘The Callisto Protocol’ is unfamiliar to domestic game companies and its genre is also novel, so the anticipation for the new release has not yet been reflected in the stock price as it was in the past. Therefore, if it succeeds at the box office, a rapid stock price increase can be expected."

LX Group was included among corporate groups exceeding 1 trillion won in market cap after separating and becoming independent from an existing large corporate group. LX Group is a large corporate group newly established in May last year by Chairman Koo Bon-joon, who took over some affiliates such as LX Hausys (formerly LG Hausys), LX Semicon (formerly Silicon Works), LX International (formerly LG Sangsa), and LX Pantos (formerly Pantos). Since four of the LG affiliates that separated into LX Group were listed companies, the group easily surpassed 1 trillion won in market cap from its inception. As of last month’s 31st, LX Group’s market cap reached 3.9 trillion won.

Companies forming the secondary battery supply chain also newly joined the 1 trillion won market cap club. W-SCOPE, which has WCP producing secondary battery separators as an affiliate, and Sungil Hightech, a secondary battery recycling specialist, newly joined the corporate groups exceeding 1 trillion won in market cap. Enchem, which produces electrolytes for secondary batteries, also surpassed a market cap of 1 trillion won. As secondary battery companies gained attention due to the growth of the electric vehicle market, those cooperating with them also appeared to benefit.

Additionally, SD, which has SD Biosensor, the largest domestic diagnostic kit company, as an affiliate, surpassed a market cap of 1 trillion won. This is attributed to the benefit from increased use of self-diagnostic kits by health authorities amid the COVID-19 endemic (periodic epidemic). Jungheung Construction, which acquired Daewoo Construction as a new affiliate, also saw its market cap increase to 1.7477 trillion won.