'Dongsin Construction, a Lee Jae-myung Theme Stock, Surges 40% in Two Days'
Kim Geunhan Becomes Top Individual Shareholder in Construction Industry
Poor Business Performance, but Financial Soundness Remains Stable
The stock valuation of Kim Geun-han, CEO of Dongsin Construction, a representative ‘Lee Jae-myung theme stock,’ surged by 40% in just two days. The amount approaches 50 billion KRW. As a result, CEO Kim has become the wealthiest stockholder in the construction industry.
Padong Silian Apartment in Suseong-gu, Daegu, constructed by Dongshin Construction in the past. Dongshin Construction website.
According to the Financial Supervisory Service’s electronic disclosure on the 28th, CEO Kim holds 3,036,299 shares of Dongsin Construction (36.1% stake). The stock price of Dongsin Construction hit the upper limit on the 26th, the day Lee Jae-myung, leader of the Democratic Party of Korea, was acquitted, and continued to rise on the 27th. The company’s headquarters is located in Andong, Gyeongbuk, Lee’s hometown, which is why it is classified as a representative ‘Lee Jae-myung theme stock.’ The cumulative increase over two days reached 40%. During the same period, CEO Kim’s stock valuation rose by 47.6 billion KRW, from 118.4 billion KRW to 166 billion KRW.
CEO Kim’s stock valuation is the highest among individual shareholders holding stakes in listed construction companies. According to the ‘Individual Shareholder Ranking’ by financial information provider FnGuide, CEO Kim’s stock valuation ranked 185th as of the 26th. Rising 177 places compared to a year ago, he topped the list of individual shareholders related to the construction industry. Dongsin Construction’s stock price used to trade in the 20,000 KRW range but once reached a peak of 73,300 KRW following the December 3 martial law incident.
There are many listed construction companies larger than Dongsin Construction, which has a market capitalization of about 460 billion KRW. However, large construction companies are usually at the bottom of their ownership structures. The owners’ stakes in these companies tend to be small. For example, DL Group Chairman Lee Hae-wook holds only 0.12% of DL E&C shares. He is the largest shareholder of Daelim, an unlisted holding company of DL Group. The DL Group’s ownership structure is Daelim → DL → DL E&C → DL Construction. Even GS Construction, directly managed by the owner family, has CEO Heo Yoon-hong and Chairman Heo Chang-soo’s GS Construction share valuations below 100 billion KRW.
Despite the soaring stock price, Dongsin Construction’s performance is very poor. According to the recently disclosed 2024 business report, sales were 68.9 billion KRW, and operating profit was 585.89 million KRW, down 17% and 91%, respectively, from the previous year. The operating profit sharply declined due to an increase in the cost ratio (cost relative to sales).
Financial soundness is relatively good. The debt ratio is 14%, which is considered stable in the construction industry where companies often exceed 100%. All four inside directors, including CEO Kim, are relatives, making it a typical ‘family company.’ The business mainly focuses on civil engineering, architecture, housing construction, and cultural heritage projects. Sales are generated mainly from public contracts in the Gyeongbuk region. Last year, the company ranked 171st in construction capability evaluation.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
