The stock price of Hanjin Kal is moving following a domestic activist fund’s attempt to take it over. Securities companies that had made gloomy forecasts on its stock price have raised their target prices.
According to the financial investment industry on Nov. 18, the target price of Hanjin Kal has been raised 7.41% since Nov. 15 when private equity fund Grace Holdings announced that it has become the second largest shareholder of Hanjin Kal. During this period, Daishin Securities raised the target price of Hanjin Kal from 27,000 won to 29,000 won and KTB Investment & Securities from 28,000 won to 30,000 won. Hanjin Kal is the holding company of the Hanjin Group, which includes Korean Air, Jin Air, and Kal Hotel Network as its subsidiaries.
During the same period, the target prices of these affiliates also rose. Shinhan Financial Investment raised the target price of Jin Air from 24,000 won to 25,000 won and Samsung Securities from 21,000 won to 24,000 won. KB Securities elevated the target price of Korean Air from 30,000 won to 33,000 won and Shinhan Financial Investment from 35,000 won to 39,000 won.
Securities firms regarded the Hanjin Group's management crisis as good news and raised their target prices. On Nov. 16, the day after the private equity fund’s announcement of a hostile takeover bid, Hanjin Kal closed with a 14.75% jump.
Stock prices of Hanjin Group affiliates have been on the decline due to deviant behaviors of some members of the owner family including "the nut rage” involving the eldest daughter of Hanjin chairman Cho Yang-ho and "the water rage" involving his second daughter.
As for the stock price of Hanjin Kal, which had been at the 20,000 won level, plunged to 15,800 won on July 3. The stock price of Korean Air, which had reached 40,000 won at the beginning of the year, plummeted to 25,550 won on Oct. 12. Jin Air, which had risen to 34,400 won on April 11, plunged to 16,500 won on Oct. 30.
However, market analysts expect the risks posed by the owner family members to be resolved as KCGI, the operator of Grace Holdings, will attempt to improve its governance structure by replacing directors.
An expectation that shareholder return will be strengthened also may touch off a rise in share prices. If the National Pension Service, Credit Suisse, and Korea Investment Trust support KCGI, its stake will climb to 26.19%. If minority shareholders also support KCGI, it will be able to acquire a friendly stake larger than that of Cho Yang-ho. Since KCGI is an activist fund, it is highly likely that it will strongly demand dividend expansion from its owner's family in the future.