[Featured Stock] One Open Letter Sends KCC Shares Up 7%

KCC's share price is showing strong gains of over 7% after an open letter was sent to the company that included proposals such as monetizing its stake in Samsung C&T and canceling treasury shares.

As of 9:35 a.m. on the 13th, KCC was trading at 600,000 won, up 7.91% (44,000 won) from the previous trading day.

On the previous day, LS Securities maintained its "buy" investment rating on KCC and raised its target price to 648,000 won.

Jung Kyunghee, an analyst at LS Securities, said, "On the 11th, news emerged that Truston Asset Management had sent an open shareholder letter to KCC that included proposals such as monetizing its Samsung C&T shares and canceling treasury shares," adding, "In relation to this, the view was presented that 'if Samsung C&T shares are sold and the discount is eliminated, shareholder value is expected to increase by about 78.3%, and if, based on this, exchangeable bonds are issued to refinance high-interest borrowings, the enhancement of shareholder value from interest cost savings alone would be about 54.6%.'"

She went on to say, "The contents of the shareholder letter can be summarized as: (1) amending the articles of incorporation to introduce a new non-binding shareholder proposal system, (2) monetizing Samsung C&T shares, which are a non-core asset, (3) canceling treasury shares, and (4) reestablishing the shareholder return policy," adding, "The value of KCC's holdings of listed equities is about 5.4 trillion won, which exceeds KCC's market capitalization."

Jung commented, "Open letters have been sent in the past as well, but their practical impact was limited," and continued, "However, after last year's amendment to the Commercial Act and in a situation where measures to enhance the value of ordinary shareholders, such as the mandatory cancellation of treasury shares, are being codified this year, their practical influence is increasing. Accordingly, monetizing the stake in Samsung C&T and canceling treasury shares are emerging as key factors for enhancing corporate value."