Many Disclosures Negative for Stock Prices
Management Disputes and Suspension of Transactions Among Key Issues
On the eve of an exceptionally long Chuseok holiday, listed companies once again engaged in the familiar practice of 'owl disclosures,' releasing a flood of negative news after the stock market closed.
According to the electronic disclosure system of the Financial Supervisory Service on October 3, a total of 297 disclosures were filed by KOSPI and KOSDAQ-listed companies the previous day. There were 172 disclosures from KOSPI-listed companies and 125 from KOSDAQ-listed companies. Of these, 134 disclosures (71 from KOSPI, 63 from KOSDAQ), accounting for nearly half (45.1%), were made after the regular trading session ended at 3:30 p.m. Notably, a significant number of these disclosures were negative for stock prices, such as lawsuits over management rights disputes or the suspension of transactions with business partners.
Dongsung Pharmaceutical, which is embroiled in a management rights dispute, disclosed that a lawsuit was filed on this day seeking to cancel the appointment of four internal directors, which had been resolved at an extraordinary general meeting of shareholders on September 12. In a separate disclosure, the company announced that at a board meeting on September 25, CEO Na Wonkyun was dismissed and Yoo Youngil, CEO of Raehill Korea, was appointed as the new CEO. However, the company stated that it is reviewing legal procedures due to procedural defects, such as the lack of guaranteed attendance rights and the unilateral convening, postponement, and enforcement of the meeting.
The KOSPI and KOSDAQ indices are displayed on the electronic board at the Korea Exchange in Yeouido, Seoul. Photo by Kang Jin-hyung
Youngpoong Paper disclosed that it changed its CEO from Lee Oksun to Kwon Hyukbeom, former CEO of KH Construction, due to Lee Oksun's "personal reasons." Beomyang Construction also announced that it had been restricted from participating in bids for one month by Jangseong-gun, Jeollanam-do, after withdrawing from a joint contract for the Cheongun Underpass construction project in the region.
Paradise reported through its consolidated financial statement disclosure that casino sales in September amounted to 64 billion won, a 20.4% decrease from the previous month, while drop (total chip purchase amount) also fell by 13.5% to 567.7 billion won. However, a Paradise official explained, "We make such disclosures around this time every month. Although September's results declined compared to the previous month, which was the peak season (August), sales improved by more than 4% compared to the same month last year, indicating strong performance."
There was also some positive news among the disclosures released during a time when most investors were traveling for the holiday and interest was low. Hanwha Systems announced after the market closed that it had signed a mass production contract worth 357.3 billion won with the Defense Acquisition Program Administration for the "Long-range Surface-to-Air Missile (L-SAM) Multi-Function Radar (MFR)" system.
Disclosures made during timeframes when investors are less likely to pay attention can be particularly disadvantageous to shareholders. To address this, the Korea Exchange re-announces all disclosures made after market close on the last trading day before a holiday period of three days or more through its website and other channels on the first trading day after the break.
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