Where Have All the 'Hwangjeju' Stocks Gone... Will Ecopro Touch 1 Million Won?

LG Household & Health Care, NCSoft, Taekwang Industrial Stocks Halved in 2 Years
EcoPro Stock Soars Nearly 9 Times in 6 Months

Although the domestic stock market has been on a rising rally this year, there has not been a single so-called 'Emperor Stock' with a closing price exceeding 1 million KRW. Stocks once called Emperor Stocks, such as LG Household & Health Care, NCSoft, and Taekwang Industrial, have fallen to less than half their value over the past two years due to poor earnings performance, leaving no trace of their former glory.

According to the Korea Exchange, the highest-priced stock in the domestic market, including KOSPI and KOSDAQ, is Ecopro. It closed at 941,000 KRW on the 6th. During the day, it even reached 982,000 KRW. At the beginning of the year, Ecopro's stock price was in the low 100,000 KRW range, but it soared nearly ninefold in just six months, hitting a 52-week high and becoming the only stock currently vying for the Emperor Stock status in the domestic market. Its market capitalization also reached 25.137 trillion KRW (based on the closing price on the 6th), ranking 14th overall in the combined KOSPI and KOSDAQ, surpassing Celltrion, Kakao, and LG Electronics. However, Ecopro has a short-selling balance of 1.2 trillion KRW, the highest among all KOSDAQ stocks. Due to its high short-term volatility, securities firms continuously issue 'investment caution' warnings. As of 9:45 AM on the 7th, Ecopro's stock price was 953,000 KRW, up 1.28% from the previous day and trading actively.

The next highest-priced stock after Ecopro in the domestic market is Samsung Biologics, which closed at 749,000 KRW on the 6th. Following are Samsung SDI (703,000 KRW), LG Chem (664,000 KRW), Taekwang Industrial (614,000 KRW), LG Energy Solution (565,000 KRW), and Young Poong (542,000 KRW). However, these stocks are all below 800,000 KRW, so there is still a long way to go before reaching the 1 million KRW Emperor Stock status.

In the past, stocks exceeding 1 million KRW were not uncommon. Looking at stocks that stayed in the 1 million KRW range over the past five years, there are five: LG Household & Health Care (1,784,000 KRW on July 1, 2021, intraday high), Taekwang Industrial (1,749,000 KRW on March 15, 2019), LG Chem (1,050,000 KRW on January 14, 2021), NCSoft (1,048,000 KRW on February 8, 2021), and Samsung Biologics (1,034,750 KRW on August 18, 2021). However, as the KOSPI fell about 25% annually last year amid an unprecedented bear market, these stocks have all relinquished their Emperor Stock badges.

Among the five stocks, LG Household & Health Care experienced the largest decline in stock price. It closed at 444,500 KRW (as of the close on the 5th), down 75.1% from its all-time high (1,784,000 KRW). LG Household & Health Care's annual operating profit sharply dropped from 1.2896 trillion KRW in 2021 to 711.1 billion KRW in 2022, and it is estimated to record the high 600 billion KRW range this year, marking a three-year downward trend. This is mainly due to China, which accounts for 75% of LG Household & Health Care's cosmetics revenue, implementing lockdown measures during the COVID-19 pandemic, delivering a direct blow. Although the stock price rose around March this year on expectations of China's economic reopening, the effect fell short of expectations, leading to a renewed decline. Hanuri, a researcher at Meritz Securities, pointed out a 'total crisis' ahead of the Q2 earnings announcement and recommended a conservative approach, judging that a short-term rebound is difficult.

NCSoft also closed at 294,000 KRW, down about 72% from its previous high (1,048,000 KRW). The last time NCSoft's closing price was below 300,000 KRW was on March 28, 2017 (289,500 KRW), over six years and four months ago. The declining performance of games using the flagship 'Lineage' intellectual property (IP) and the lack of significant new releases have contributed to this. Lee Ji-eun, a researcher at Daishin Securities, stated, "Due to new releases from competing game companies, a decrease in traffic and sales for NCSoft's lineup is inevitable," adding, "Especially, Lineage M is expected to show weak seasonal effects despite the 6th-anniversary update in Q2." She further recommended monitoring short-term performance amid intensified new game competition expected in the second half of the year.

Taekwang Industrial, whose stock price has fallen 64.4% from its peak, has not closed above 1 million KRW since it closed at 1,007,000 KRW on February 22 last year. Its stock price dropped to the 600,000 KRW range after recording a quarterly operating loss for the first time in 10 years in Q2 last year due to deteriorating earnings. LG Chem (-35.6%) was once classified as an Emperor Stock but has recently remained in the 600,000 KRW range, showing a sluggish performance.

Samsung Biologics closed at 755,000 KRW on the 5th, down 27% from its all-time high (1,034,750 KRW). However, its earnings are outstanding. Operating profit, which was 537 billion KRW in 2021, rose to 984 billion KRW last year and is expected to surpass 1 trillion KRW for the first time since its founding this year. Wei Hee-joo, a researcher at Korea Investment & Securities, said, "As the antibody market grows, Samsung Biologics' competitiveness in securing orders is gradually strengthening," adding, "The industry outlook is expected to improve further from July."