Moved to a Bigger House but Stock Prices 'Wither'

Stocks Transferred from KOSDAQ to KOSPI Show Weak Prices This Year
POSCO DX Stock Halved After Transfer
LN F and Paradise Also Record Double-Digit Declines
Profit Outlook Not Bright, Stock Rebound Unlikely

The stock price performance of companies that transferred their listings from the KOSDAQ market to the KOSPI market in the first half of this year has been sluggish. While these companies had made a name for themselves by ranking high in market capitalization on the KOSDAQ, they have failed to make a significant impact after moving to the KOSPI market. Earnings have also fallen short of expectations, making a stock price rebound difficult.

According to the Korea Exchange on the 18th, POSCO DX's stock price has fallen for four consecutive days, dropping to 34,000 KRW. POSCO DX, which opened the door for transfers by entering the KOSPI at the beginning of this year, has seen its stock price halved compared to the first day of the transfer. The stock price, which was above 70,000 KRW just before the transfer, has steadily declined and is now trading in the 30,000 KRW range. POSCO DX even hit a 52-week high of 79,600 KRW intraday just two trading days before the transfer date, but after moving to the KOSPI market, it has continuously fallen to the 50,000 KRW level. Although it briefly recovered to the 60,000 KRW range, it failed to maintain the upward momentum and has repeatedly weakened, with the stock price now below 40,000 KRW.

Following POSCO DX, L&F, which moved to the KOSPI market at the end of January, has also shown disappointing stock price movements after the transfer. The stock price, which had risen to the 200,000 KRW range at the beginning of the year, has dropped to the 140,000 KRW range after the transfer. On the previous day, it fell intraday to 123,300 KRW, marking a 52-week low.

Paradise, which entered the KOSPI market on the 24th of last month, is no different. Its stock price, which was in the 14,000 KRW range on the first day of KOSPI listing, has now fallen to the 12,000 KRW range.

In the past, moving from KOSDAQ to KOSPI was considered a positive factor for stock prices. This was because it was expected to improve supply and demand through corporate value revaluation and expansion of the investor base. However, recently, although stock prices tend to rise due to such expectations before the transfer announcement and prior to the transfer, it is common for stock prices to underperform compared to before the transfer once the transfer is completed. Cheolgyo Bae, a researcher at NH Investment & Securities, said, "There are several supply and demand advantages to KOSPI listing, such as inclusion in the KOSPI 200 index and demand from pension funds. The KOSPI transfer event has shown positive momentum for stock prices until the day before the KOSPI listing, but generally tends to underperform the KOSPI after the transfer."

The stock price decline is attributed to profit-taking selling after the transfer and disappointing business conditions and earnings. POSCO DX and L&F, which chose to move to the KOSPI amid last year's strong secondary battery market, are struggling this year due to the sluggishness in secondary battery stocks.

With earnings prospects also bleak, a stock price rebound seems difficult. L&F is expected to continue posting losses in the second quarter of this year. Hyeyoung Jeon, a researcher at Daol Investment & Securities, explained, "L&F's second-quarter earnings are expected to show sales of 567.1 billion KRW, down 58.5% year-on-year, and an operating loss of 82.9 billion KRW, falling short of consensus (average securities firm forecasts). Although inventory valuation losses have been settled, high cost burdens remain, leading to a third consecutive quarter of losses."

Paradise is also expected to fall short of market expectations for second-quarter earnings. Namsu Lee, a researcher at Kiwoom Securities, said, "Paradise's second-quarter sales are expected to increase by 2.5% year-on-year to 282.2 billion KRW, while operating profit is expected to decrease by 25.4% to 40.9 billion KRW, falling short of consensus. The high base of last year's performance in the second and third quarters of this year means additional growth momentum is needed."