[Featured Stock] Coway Rises 8% on News of Strengthened Shareholder Return Policy

Coway, which announced a policy to strengthen shareholder returns, is rising more than 8% in early trading on the 7th.

As of 9:19 a.m. on the day, Coway is trading at 69,900 won, up 9.05% (5,800 won) from the previous close.

The stock price appears to be rising due to expectations that the company's valuation will increase following the shareholder return policy announced the previous day.

Coway disclosed its shareholder return policy through 2027 the day before. From 2024 to 2027, the total shareholder return fund will be about 40% of consolidated net income. Last year, the company returned value to shareholders through year-end dividends and cancellation of all treasury shares acquired (2.6%), and from this year, it plans to return value through year-end dividends and acquisition and cancellation of treasury shares.

Accordingly, Hanwha Investment & Securities raised Coway's target price from 98,000 won to 110,000 won. Lee Jin-hyeop, a researcher at Hanwha Investment & Securities, said in a report on the day, "With this dividend policy, Coway's dividend per share (DPS) for last year is expected to be 2,800 won (dividend yield 4.3%)," adding, "This is about twice the previous shareholder return policy."

The researcher analyzed, "Coway's price-to-earnings ratio (PER) fell from around 20 times in 2017 to about 6 times in mid-2023 but recently recovered to about 8 times due to market share expansion and turnaround of overseas subsidiaries," adding, "Since Netmarble (251270) acquired Coway, the major shareholder governance structure has also stabilized to some extent, and with the strengthened shareholder return policy, the final puzzle has been completed."

Shinhan Investment Corp. also raised Coway's target price from 78,000 won to 82,000 won, expecting an increase in corporate value due to the aggressive shareholder return policy.