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Hyundai Heavy’ 4 Spin-off Companies Show Starkly Different Stock Prices

Hyundai HeavyHyundai Heavy Industries (HHI) relisted on the Korean stock exchange on May 10 along with its three spinoff companies. HHI saw its stock prices skyrocket in early trading on the first day, while its three spinoff companies – Hyundai Electric & Energy System, Hyundai Robotics and Hyundai Construction Equipment – all fell short of the opening price.

According to Korean stock exchange sources on the 10th, HHI’s shares rose 14.97 percent to close at 185,000 won (US$164) compared to a day earlier, recording a new high in 52 weeks. In March, HHI decided to spilt up into an independent entity from non-shipbuilding operations and spin off its electric electronic business to Hyundai Electric & Energy System, robot and automation system business to Hyundai Robotics and construction equipment business to Hyundai Construction Equipment. As the shipbuilding industry is recently picking up and shows an increasing number of new orders, HHI is expected to show a positive flow of stock prices, along with a better corporate value of its subsidiary Hyundai Samho Heavy Industries.

The share price of the three newly listed companies fell on their first day. Their stocks were put up for sale due to profit taking as the opening price was on the rise. Hyundai Electric & Energy System dropped 8.5 percent, while Hyundai Robotics and Hyundai Construction Equipment fell 5.22 percent and 4.38 percent, respectively.

However, the three companies have a bright prospect. Hyundai Electric & Energy System is expected to gain benefits from the growth of the global extra-high voltage power equipment market. The company is expanding its business portfolio from the Middle East to the U.S. It also plans to strengthen its competitiveness with U.S. made product by establishing its sales outlet and plant in North America. Hanwha Investment & Securities proposed the company’s target stock price at 480,000 won (US$426).

As the holding company, Hyundai Robotics will be in the center of developing a new growth engine. Its subsidiaries Hyundai Oilbank and Hyundai Global Service are also expected to increase sales. Hyundai Construction Equipment will also increase its domestic market share and have a bright future due to the growth of emerging markets. Therefore, the current stock prices of the companies are relatively low, according to securities industry sources.

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