‘Hankyung Korea Market’ is a site that investors who do some stock in Korea like every day. There is a lively discussion of stocks by knowledgeable investors. I wrote an article about Lotte Holdings a week ago. Then, a member of the Korea Economic Daily wrote, “There are more holding companies that are undervalued.” “ I bought Lotte Holdings , HL Holdings , SK Discovery, and Cuckoo Holdings,” he argued, “even if inherited, they are stocks that can comfortably endure while receiving high dividends토토사이트.” The commonality of the stocks he mentioned was the holding company. In the Korean stock market, it is not popular with investors because of the ‘holding company discount’, but it is characterized by high dividends.
Captured from a member of Hankyung, who said ‘there are many undervalued holding companies’ in Lotte Holdings News written by a reporter.
HL Holdings shares drop 20% in one year
I looked into one of them, HL Holdings. The closing price on the 19th was 33,600 won. It fell 18.84% from a year ago (May 19, 2022 at 41,400 won). The company started as Hyundai Corporation in 1962, went through Mando in 1999, and was born in 2014 when Mando split into HL Holdings, the holding company, and HL Mando , the operating company . As the holding company of the HL Group , major subsidiaries include HL Mando, HL Clemove, Mando Brose, and HL D&I Halla in the construction sector. In 2015, it absorbed and merged with Halla Meister, which runs the auto parts distribution and logistics business, and opened an era of 1 trillion won in sales for the first time in 2021. It has shown high growth of 36% in sales growth over the past three years.
On the 17th, Eugene Investment & Securities said in a report, “The first quarter sales were KRW 322.5 billion (up 7.7% year-on-year) and operating profit was KRW 33.2 billion (down 7% year-on-year). Operating profit at its own business (parts distribution/logistics) and subsidiary HL Mando was similar to last year, but equity-method gains declined YoY as HL D&I ‘s profitability deteriorated. This year, it forecast sales of 1.402 trillion won and operating profit of 155 billion won.
A view of HL Holdings Sejong Logistics Center. Courtesy of HL Holdings
Lee Jae-il , a researcher at Eugene Investment & Securities, said, “ HL Holdings is intensively fostering four core businesses .” Researcher Lee judged, “In the case of the module business in progress in the US and Germany, it has won orders from leading electric vehicle companies in North America, contributing to securing mid- to long-term sales, and the long-term margin rate outlook is good.” However, we lowered our target price from KRW 60,000 to KRW 42,000 due to the decline in the value of its stake in subsidiaries. As of the 19th, the average target price of the three securities companies is 47,000 won. This implies a 39.88% upside potential from the current share price.
HL Holdings stock price monthly graph.
Management side “Expecting synergy through active startup investment”
What will be the shareholder composition of HL Holdings? The total number of shares is 10,472,070, and HL Group Chairman Chung Mong-won and seven others are the largest shareholders with a 28.48% stake (2,982,606 shares). Major shareholders include 6.49% (679,773 shares) of the National Pension Service, 6.40% (670,325 shares) of Barings Asset Management and two others, and 6.26% (655,280 shares) of VIP Asset Management. Due to the attractiveness of high dividends, institutions with 5% or more are listed on the list of major shareholders.
On the 21st, an official from HL Holdings was asked about this year’s new growth engine, “We made a 100 billion won equity investment (September 2021) in WCP, a manufacturer of secondary battery separators, and investments in startups (Bmycar, Dr. Car, Dealer Tire, etc.) We are actively pursuing a synergistic effect.”
HL Holdings website capture of each business division introduction. Courtesy of HL Holdings
When asked what kind of efforts are being made for shareholders, he emphasized, “We pay a settlement dividend of 2,000 won per share every year, and we have canceled 25.6 billion won (approximately 6% stake) of treasury stock over the past five years.” HL Holdings is a stock included in the ‘KOSPI High Dividend 50 Index’, a collection of 50 stocks with high dividend yield among KOSPI listed stocks. The market price dividend rate is around 6.5%, which is about three times the average of 2.3% for listed companies in the stock market in 2021.